The Coppock Curve was first introduced by Edwin Coppock for spotting long-term trends in stock indexes, but the Coppock Curve is still used today for generating signals for individual stocks and securities. The indicator was designed to be used on the monthly timeframe for generating buy and sell signals as it oscillates above and below the zero line.
Coppock Curve Interpretation
Using the Coppock Curve is straightforward. You can buy when the curve moves above zero and sell once the curve moves below zero. This interpretation of the Coppock Curve can work for both long and short positions.
To get the most out of the Coppock Curve it may pay to adjust the default settings. The indicator was designed to work on monthly timeframes and therefore might give untimely signals. By increasing the curve’s sensitivity you might be able to capitalize on more profitable trades, especially when used on shorter timeframes than monthly.
Making the most out of the Coppock Curve
It should be noted that the Coppock Curve is sensitive to ‘choppy’ short-term price fluctuations. During these times it’s expected that the curve will give false signals. Because of these false signals, the curve is best applied to ranging markets and when there’s a long-term trend in force to either the upside or downside.
As always, it’s important to set a stop loss when using the indicator. Special care should also be taken to include other indicators such as trendlines, moving averages, and other tools for a comprehensive trading strategy.
In short, the Coppock Curve can help you set buy and sell orders as it naturally oscillates above and below its zero line. The indicator is best used for trading on long-term trends and in ranging markets to make the most profitable trades possible. Long-term investors will find the indicator helpful but it can also be adjusted for short-term traders as well.