TRIX Indicator

#momentum #trendfollowing #oscillator 

Inventor: Jack Hutson 

The percentage change of a triple-smoothed EMA of price. The triple smoothing filters out almost all small noise, leaving one gentle line around zero that turns only when a move has real substance. Plotted with a signal line (its own 20 EMA). 

Default period: 5, signal 20 

Line above zero indicates the smoothed trend is up. Line below zero indicates it is down. 

Because of heavy smoothing, its signals are late but clean. 

Useful readings: 

TRIX crosses above zero: Solid uptrend confirmed 

TRIX crosses below zero: Solid downtrend confirmed 

TRIX crosses above its signal line: Earlier momentum turn up 

TRIX crosses below its signal line: Earlier momentum turn down 

TRIX flattening at an extreme: Long move tiring 

Price at new high but TRIX lower than last peak: Bearish divergence on a very smooth line, take it seriously 

Objective rules: 

Bullish: TRIX crosses above its signal line. 

Bearish: TRIX crosses below its signal line. 

Strong bullish setup: Signal-line cross AND TRIX above zero 

Strong bearish setup: Signal-line cross AND TRIX below zero 

Positional rule: Stay long while TRIX holds above zero on the weekly chart 

What makes it unique: 

Triple smoothing plus a rate of change filters out nearly everything except genuine trend shifts. It trades earliness for one of the cleanest zero lines in charting. 

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.

 

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.