When considering the use of an oscillator, it bears mentioning that the time period for oscillators is tied to underlying market cycles. A length of half of the cycle length is used.

The most common time inputs are 5, 10, and 20 days based on calendar day periods of 14, 28, and 56. Wilderââ,¬â"¢s Relative Strength Index (RSI) uses a period of 14 days, which is half of 28. Previously, I pointed out why the numbers 5, 10, and 20 keep cropping up in moving averages and oscillators formulas. So let us mention once again that 28 calendar days (20 trading days) represent an important dominant monthly trading cycle and other numbers are related harmonically to that monthly cycle.

To prove this point, consider the popularity of the 10-day momentum and the 14-day Relative Strength Index (RSI). The lengths of these two technical analysis tools are based largely on the 28-day trading cycle and measure half of the value of the dominant monthly cycle.

Andy Swan is co-founder and head trader for DaytradeTeam.com.  To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.