Williams recommends that you trade following a divergence and a breakout in the Ultimate Oscillator's trend. A bullish divergence occurs when the security's price makes a lower low that is not confirmed by a lower low in the Oscillator.
Williams recommends trading this indicator based on divergences:
Distribution of the security is indicated when the security is making a new high and the A/D indicator is failing to make a new high. Sell.
Williams recommends that you initiate a trade following a divergence and a breakout in the Ultimate Oscillator's trend.
The Ultimate Oscillator indicator in BigCharts references the following default parameters:
First Oscillator Time Period: 7 Bars ...
Williams reccommends buying when prices fall to a new low yet the A/D indicator fails to reach a new low. Likewise, sell when the price makes a new high and the indicator fails to follow suit.
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Generally a minor peak is formed when the high of the bar or candlestick is higher that the high of the bars or candlesticks on either side. Larry Williams refined this method by requiring that the bar on the right cannot be an inside bar but must ...
 See also: Williams, Divergence, Trend, Sell, Indicator
  
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