Coppock Curve momentum indicator

 The Coppock Curve is a momentum indicator developed by Edwin Coppock to identify long-term buying opportunities in the stock market. It was originally created for use with monthly data to identify bull markets. The indicator combines rates of change (ROC) and a weighted moving average (WMA) to generate signals.

Calculation of Coppock Curve:

  1. Rate of Change (ROC):

    • Calculate the 14-month ROC.
    • Calculate the 11-month ROC.

  2. Sum of ROC:

    • Add the 14-month ROC and the 11-month ROC.

  3. Weighted Moving Average (WMA):

    • Apply a 10-period weighted moving average to the sum of the ROCs.

Formula:

Interpretation and Usage:

  • Buy Signal:

    • A buy signal is generated when the Coppock Curve crosses above zero from below, indicating the start of a potential bull market.

  • Long-Term Indicator:

    • The Coppock Curve is primarily used for long-term market analysis and is not typically used for short-term trading.

  • Market Trends:

    • The indicator helps to confirm long-term trends and can be used in conjunction with other technical analysis tools.