Percentage Price Oscillator (PPO)

Summary

The PPO is a momentum oscillator that measures the difference between 2 exponential moving averages (EMA) as a percentage of the larger EMA. The use of different EMAs can be used to increase or decrease the sensitivity of the PPO. For example the combination of a slower long EMA with a faster short EMA will result in an increase of sensitivity. The most common EMAs used are the 12-day EMA and the 26-day EMA.

Calculation
PPO = Shorter EMA - Longer EMA
Longer EMA
x 100
Signals

Positive readings indicate an upside trend, while negative readings signal a downside momentum. It is clear that the higher the value of the shorter EMA from the value of the longer EMA, the higher the PPO reading and hence the stronger the upward trend. On the other hand, higher values of the longer EMA from the shorter EMA provide evidence for a stronger downside momentum.