It is a common knowledge that oscillators work best when the market is non-trending and when the market is trending, oscillators tend to give bad signals. In our previous article, we explain how the RSI indicator can be used as a trend indicator. This helps to solve the trending phase weakness in oscillators. In this article, we are going to address how two momentum oscillators can help to defray trending phase signals as well.

Momentum oscillators, while they are constructed differently, tend to produce similar signal outcomes. Afterall they are designed to produce a certain outcome, like alerting traders to overbought or oversold condition.

In the below chart, we can see the 3 most popular momentum oscillators, RSI, Stochastic and the MACD, produce the same alert when there was a divergence between price and oscillator. (Bullish and bearish divergence) The 3 momentum oscillators also tend to have similar peak and trough.

Chart 1. Momentum Oscillators tend to produce similar results.

If those oscillators tend to produce the same alert, why do traders use more than one momentum oscillator? We can make use of 2 momentum oscillators for complementary and conflicting signals. In chart 2 below, the first price divergence that occurred in September to October of 2024, we saw that the MACD did not have a clear divergence with price. The RSI had a clear divergence with price. If you use only the MACD indicator, you may have missed that bearish divergence signal. This is what I would call a conflicting signal. 

In the second divergence(chart 1), a bullish divergence was detected by both the MACD and the RSI. This is a complementary signal, which helps to increase the confidence level for traders to take the trade.

Chart 2 Conflicting and complimentary signals.

The MACD is constructed from two exponential moving averages.  It uses the difference between 2 Exponential Moving Averages to calculate price momentum movement. Due to its construction, the MACD tends to work better in a trending market than the RSI. In chart 2 above, in the up trending channel, we can see that the MACD stays in bullish half, even in the sideway consolidation phase, MACD remains in the bullish side. When using together with the RSI, I would ignore overbought condition when the MACD is in the bullish half and is rising.

When using two oscillators, it is important to choose one that work well in a trending market and one that work better in a non-trending market. The RSI and Stochastics indicator tends to be similar and it would be better to choose either one to be used with the MACD indicator.

To summarize, these are the advantages of using two oscillators together.

1. Diverse perspectives
2. Confirmation signals
3. Conflicting signals 

While using two oscillators help to cut down on false signals, there will be times when both oscillators give false signals. There will be times when both oscillators give bad signals in a whipsaw period leading to losses. One has to be mindful and careful when using oscillators in a volatile and choppy non-trend period of price movement.