The Coppock Curve: How to Identify Long-Term Market Trends
The Coppock Curve: How to Identify Long-Term Market Trends
The Coppock Curve is a long-term momentum indicator that helps traders and investors identify major market trends and potential buy opportunities. Unlike short-term oscillators, the Coppock Curve is designed to signal bullish reversals in stock indices and long-term investments.
In this guide, we’ll break down how the Coppock Curve works, how to use it effectively, and the best Coppock Curve trading strategies.
What Is the Coppock Curve?
The Coppock Curve was developed by economist Edwin Coppock as a long-term trend-following tool. It is mainly used for stocks and indices to detect bullish reversals after significant downtrends.
How to Interpret the Coppock Curve:
- A rising Coppock Curve signals a bullish market trend.
- A falling Coppock Curve suggests market weakness or a potential bearish period.
- When the Coppock Curve crosses above zero, it generates a buy signal.
Unlike other momentum indicators, the Coppock Curve does not generate sell signals—it is primarily used for identifying buying opportunities.
How the Coppock Curve Is Calculated
The Coppock Curve formula uses a weighted sum of two Rate of Change (ROC) periods, smoothed by a 10-period Weighted Moving Average (WMA):
[
\text{Coppock Curve} = WMA_{10} (\text{ROC}{14} + \text{ROC}{11})
]
Where:
- ROC 14 and ROC 11 measure price changes over 14 and 11 periods.
- WMA 10 smooths the combined ROC values to reduce noise.
This calculation helps detect long-term momentum shifts in major stock indices and large-cap assets.
How to Use the Coppock Curve in Trading
Identifying Long-Term Market Trends
- If the Coppock Curve is rising and above zero, the market is in a bullish trend.
- If the Coppock Curve is falling, caution is needed, but no sell signal is given.
Coppock Curve Buy Signal Strategy
- Buy when the Coppock Curve crosses above zero after a prolonged downtrend.
- Wait for confirmation from price action or moving averages before entering long positions.
Coppock Curve Trend Confirmation Strategy
- If the Coppock Curve is rising, it confirms a strong market uptrend.
- If the Coppock Curve is flat or declining, the market may be entering a weak phase.
Best Coppock Curve Trading Strategies
Coppock Curve + Moving Average Strategy
- Buy when the Coppock Curve crosses above zero and price is above the 200-day SMA.
- Use the 50-day SMA to identify strong upward momentum.
Coppock Curve + RSI Strategy
- Buy when the Coppock Curve is rising and RSI is below 40 (early entry).
- Avoid buying when RSI is overbought (>70), even if the Coppock Curve is bullish.
Coppock Curve + MACD Strategy
- Use MACD crossovers to confirm Coppock Curve buy signals.
- A bullish MACD crossover + rising Coppock Curve → Strong buy confirmation.
Best Coppock Curve Settings for Different Trading Styles
- Long-Term Investing: Default (10, 14, 11) settings for major stock indices.
- Swing Trading: Can be adjusted to (5, 10, 7) for shorter-term signals.
- Crypto & Forex Trading: Less effective, but can be tested with shorter ROC periods.
Common Coppock Curve Mistakes to Avoid
❌ Using the Coppock Curve for sell signals – The indicator is only designed for buy signals.
❌ Ignoring market conditions – Always confirm with moving averages or fundamental analysis.
❌ Expecting fast signals – The Coppock Curve is a long-term tool, not for day trading.
Final Thoughts – Should You Use the Coppock Curve?
The Coppock Curve is a valuable long-term trend indicator for investors and swing traders looking to spot market reversals and strong buy signals. When used with moving averages, RSI, or MACD, it helps improve trade accuracy and reduce false signals.
📌 Want to Trade With the Coppock Curve?
Try applying Coppock Curve settings on stock indices and test how it performs in different market cycles!
