Coppock Curve: A Momentum Indicator with Long-Term Vision

In the ever-evolving landscape of trading indicators, some tools stand the test of time due to their unique design and lasting relevance. One such tool is the Coppock Curve — a momentum-based indicator originally created for identifying long-term buying opportunities in stock markets. Despite being introduced over half a century ago, it still finds relevance today — especially for swing traders and investors looking to catch market bottoms.

In this article, we’ll take a deep dive into the Coppock Curve: how it works, how to read it, how to use it in trading, and where traders sometimes go wrong.

🧠 What Is the Coppock Curve?

The Coppock Curve, developed by economist Edwin Coppock in 1962, is a long-term momentum indicator designed to identify major bottoms in the stock market. Originally intended for monthly timeframes, it calculates a smoothed momentum reading based on price changes over long periods.

Coppock believed that markets tend to recover from bear phases similarly to how people grieve — slowly and steadily. He designed the curve to spot the beginning of these long-term recoveries.

🔧 How Does It Work?

The formula behind the Coppock Curve is simple but effective. It uses the Rate of Change (ROC) of two different periods and applies a Weighted Moving Average (WMA) to smooth the result.

The standard formula is:

Coppock Curve = WMA[10] of (ROC[14] + ROC[11])

Where:

• ROC[14] = 14-period rate of change

• ROC[11] = 11-period rate of change

• WMA[10] = 10-period weighted moving average

This combination gives a smooth curve that responds to long-term momentum shifts, especially after extended downtrends.

📉 How to Read the Coppock Curve

• Positive Slope / Rising Curve: Indicates a potential buying opportunity. The idea is to enter when the curve turns up from below zero.

• Flat or Falling Curve: Suggests weakness or a neutral zone.

• Crossing Zero: Not as significant as the directional turn. The most important signal is the upward turn from negative territory, which is considered a buy signal.

Unlike RSI or MACD, the Coppock Curve doesn’t produce frequent signals — and that’s the point. It’s about quality, not quantity.

📊 How to Use It in a Strategy

While originally built for monthly charts in stock markets, modern traders adapt it to various markets, including crypto and forex, and on weekly or even daily charts.

Basic Strategy Example:

1. Use Coppock on a daily or weekly chart.

2. Look for it to turn up from below zero.

3. Combine with other indicators like moving averages or volume to confirm.

4. Consider entering long positions when momentum aligns with your broader thesis.

This is particularly useful for trend reversal spotting, especially after sharp corrections or bear markets.

🧭 Key Advantages

• ✅ Excellent for identifying long-term bottoms

• ✅ Smooth curve makes it visually intuitive

• ✅ Reduces noise and false signals

• ✅ Works well with stocks, indices, and now crypto

⚠️ Common Mistakes to Avoid

1. Using on short timeframes: It’s designed for longer horizons. Intraday traders won’t benefit much from this.

2. Taking every turn as a signal: Use confirmation. Not every upward curve is a bottom.

3. Ignoring broader trend: The indicator is most useful after bear markets, not in choppy sideways markets.

📌 Final Thoughts

The Coppock Curve is not the flashiest tool, and it won’t bombard you with signals every day — but that’s exactly what makes it powerful. It encourages patience and discipline, rewarding those who wait for true trend reversals.

In an age of hyperactive markets and overused indicators, the Coppock Curve is a quiet reminder that some tools only get better with time. If your trading style is focused on major bottoms, cycle recovery, or longer-term entries, this might be the momentum ally you’ve been missing.