DMA Histogram

 

#trendfollowing #momentum 

Plots the gap between a fast and a slow moving average as bars around zero. When the fast average is above the slow one, bars are positive; when below, bars are negative. Growing bars mean the averages are separating (trend strengthening), shrinking bars mean they are coming together (trend weakening). 

Default period: 10, 20 (fast MA, slow MA) 

Bars above zero indicate bullish phase. Bars below zero indicate bearish phase. 

Bar height shows the strength of the trend. 

Useful readings: 

Bars cross above zero: Fast average crossed above slow, trend turned up 

Bars cross below zero: Fast average crossed below slow, trend turned down 

Positive bars growing: Uptrend gaining strength 

Positive bars shrinking: Uptrend tiring, averages closing in, crossover may come 

Bars hugging zero for many bars: Averages flat and together, sideways market 

Very tall bars after a long move: Stretched trend, avoid chasing 

Objective rules: 

Bullish: Histogram crosses above zero. 

Bearish: Histogram crosses below zero. 

Early exit long: Positive bars shrink for 3 bars in a row 

Early exit short: Negative bars shrink for 3 bars in a row 

Chop filter: Skip signals if histogram crossed zero more than twice in last 15 bars 

What makes it unique: 

It shows the distance between two moving averages as bars, so a coming crossover is visible while it is still forming. The shrinking bars are the crossover’s early warning.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder on RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

Default period: 10, 20 (fast MA, slow MA) 

Default period: 20, 40 (fast MA, slow MA) 

The indicator is applicable to all types of charting. It is calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin-Ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.