Triple Exponential Average (TRIX)
Contents
Unraveling Triple Exponential Average (TRIX) in Technical Analysis
Decoding TRIX: A Technical Trader's Guide
Understanding the triple exponential average (TRIX) is essential for technical traders seeking to navigate the complexities of momentum indicators and market signals. Developed by Jack Hutson in the early 1980s, TRIX offers insights into market divergences and directional cues, resembling the popular MACD indicator but with a smoother output.
Exploring TRIX Mechanics
TRIX operates by smoothing exponential moving averages (EMA) three times, filtering out insignificant price movements to reveal underlying trends. As an oscillator, TRIX identifies oversold and overbought conditions, oscillating around a zero line. Positive values signify increasing momentum, while negative values suggest a decline. Analysts often interpret TRIX crossovers with the zero line as buy or sell signals, with divergences signaling potential market shifts.
Calculating TRIX: Step by Step
To compute TRIX, one must first derive the EMA of a price, followed by double and triple exponential smoothing to obtain the final TRIX value. This intricate calculation process ensures that TRIX captures significant market movements while filtering out noise.