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 a 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 the 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.