The TRIX is a momentum indicator, that is displayed as an oscillator above and below a zero line. As a momentum indicator, this oscillator is based on smoothed moving averages and their momentum to avoid insignificant daily price movements and to aid timing. It compares two triple smoothed exponential moving averages, and displays the difference as a single line with positive and negative values.
Calculation :
EMA1 = EMA1n-1 + ((2 / (n + 1)) * (Pn – EMA1n-1))
EMA2 = EMA2n-1 + ((2 / (n + 1)) * (EMA1n – EMA2n-1))
EMA3 = EMA3n-1 + ((2 / (n + 1)) * (EMA2n – EMA3n-1))
T = (EMA3n – EMA3n-1 ) / EMA3n-1
Trading Use
The TRIX is usually used as an oscillator, with long and short entries signaled by the TRIX crossing its zero line. It can also be used as a divergence indicator, with long entries signaled by bullish divergence, and short entries signaled by bearish divergence.
Interpretation
- TRIX is best used in conjunction with CCI or Parabolic SAR.
- Depending on the number of periods chosen, TRIX keeps an investor in trends shorter than specified.
Signals
Similar to the use of the MACD indicator, a 9-period moving average of the TRIX can be used to create a signal line.
- A buy signal is given when the TRIX rises above its signal line.
- A sell signal is given when it falls below the signal line.
Res sir
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