Triple Exponential Average (TRIX)
·
TRIX is an Oscillator:
Oscillates around zero
o
Overbought if it is above zero
- I do not like this definition!
o
Oversold when it is below
zero - I do not like this definition!
·
When TRIX is used as a
momentum indicator
o
Positive value means the
momentum is increasing.
o
Below zero line suggests
the momentum decreasing.
·
When TRIX is used as a trend
indicator
o
More time staying above the
zero means uptrend.
o
More time below the zero
line means downtrend.
·
Signals
o
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.
o
I prefer combining TRIX
with a moving average with smaller time period
§
Buy only if in an uptrend
and you see the TRIX crosses above MA
§
Sell only if in a downtrend
and you see the MA crosses above TRIX
·
Divergence
o
A divergences between price
and TRIX can indicate significant turning points in the market.
