Triple Exponential Average : Application & Chart

The triple exponential average (TRIX) indicator is an oscillator. TRIX is usually used to identify oversold and overbought markets, and it can also be used as a momentum indicator. TRIX, like other common oscillators, oscillates around a zero line. A positive value indicates an overbought market while a negative value indicates an oversold market when it is used as an oscillator. A positive value suggests momentum is increasing while a negative value suggests momentum is decreasing when TRIX is used as a momentum indicator. Many analysts believe that when the TRIX crosses above the zero line it gives a buy signal, and when it closes below the zero line, it gives a sell signal. Also, divergences between price and TRIX can indicate significant turning points in the market.

As well as a momentum indicator, TRIX (the Triple Exponential Moving Average) is an oscillator which follows overbought and oversold markets. For that watch a negative value demonstrate an oversold market and positive value to demonstrate an overbought market. When TRIX is used as a momentum indicator, a negative value suggests momentum is decreasing while a positive value suggests increasing momentum. Some analysts think that the TRIX crossing above the zero line is a purchase signal and a closing below the zero line is a sell signal. Distinction between price and TRIX can also show important market turning points.

Triple Exponential Moving Average Formula

Below is the formula for the triple exponential moving average:

(3 * EMA) – (3 * EMA of EMA) + EMA of EMA of EMA)

Where:

EMA = n-day exponential moving average