Coppock Curve

Definition

The Coppock Curve is a price momentum indicator to determine major lows in the stock market and is calculated as a moving average. The Coppock Curve is said to have been developed for long-term strategies involving indexes, ETFs, and other liquid instruments rather than intraday trading. The indicator can be used to identify major market trends, determine trend direction, and guide long-term investing or trading strategies.

History 

The formula used for the Coppock Curve was developed in 1962 by Edwin S. Coppock in that year’s edition of Barron’s. The indicator was originally introduced as a long-term buy or sell indicator for major indices. It was first implemented this way to allow for indices to identify and target large trends.

Takeaways

The Coppock Curve is an oscillating trendline that ranges both higher and lower than zero, incorporating two rates of change in its calculations:

1. 11-period change;
2. 14-period change.

The curve reviews the rate of change for these periods and then derives a signal line indicator that is extrapolated from this data, by using a 10-month weighted moving average. When using the curve, traders, investors, and technical analysts can look to the signal line indicator to help analyze and come to their own investment conclusions based on their findings for medium/long-term trades.

What to look for

Just apply the Coppock Curve to a chart and then use trend analysis to analyze the bigger picture looking for where the Coppock Curve is above or below the zero line.

Summary

The Coppock Curve was created by an economist for medium to long-term trend analysis in indexes, ETFs, and other liquid instruments. It measures the rate of change and looks to present a clear trend for the medium and long-term.