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The indicator is a highly-effective technical tool used to evaluate the strength of the current trend and to determine if an established trend will continue or reverse.
The Vortex Indicator is a technical indicator invented by Etienne Botes and Douglas Siepman to identify the start of a new trend or the continuation of an existing trend within financial markets. It was published in the January 2010 edition of Technical Analysis of Stocks & Commodities. [1]
Trend lines can be used to identify positive and negative trending charts, whereby a positive trending chart forms an upsloping line when the support and the resistance pivots points are aligned, and a negative trending chart forms a downsloping line when the support and resistance pivot points are aligned.
The momentum and ROC indicators show trend by remaining positive while an uptrend is sustained, or negative while a downtrend is sustained. A crossing up through zero may be used as a signal to buy, or a crossing down through zero as a signal to sell. How high (or how low when negative) the indicators get shows how strong the trend is.
Due to the different techniques and time frames employed by trend followers to identify trends, trend followers as a group are not always strongly correlated to one another. Trend following is used by commodity trading advisors (CTAs) as the predominant strategy of technical traders. Research done by Galen Burghardt has shown that between 2000 ...
While Fosback provided a more objective interpretation of these indicators, Dysart's versions offer value to identify primary trends and short-term trend reversals. Although some traders use Fosback's NVI and PVI to analyze individual stocks, the indicators were created to track, and have been tested, on major market indexes.
- Identify single indicators and indicator trends to forecast which near-term scenario is most likely to occur. [ 3 ] According to Randolph Pherson, a good indicator should be "Observable and Collectible, Valid, Reliable, Stable, and Unique" in order to find the key drivers of change in a given scenario. [ 2 ]
The random walk index (RWI) is a technical indicator that attempts to determine if a stock's price movement is random in nature or a result of a statistically significant trend. The random walk index attempts to determine when the market is in a strong uptrend or downtrend by measuring price ranges over N and how it differs from what would be ...