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Strategies & Market Trends : Playing the QQQQ with Terry and friends.
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To: Walkingshadow who wrote (188)5/18/2005 3:11:42 PM
From: fiboman  Read Replies (2) of 4814
 
Bierovic's article 'MACD Tripple Treat' appeared in the Feb 2003 issue of Active Trader.

He described a small parameter version of MACD(3,8,13) for short term signals. The standard version is MACD(12,26,9)

The True Strength Index is related to MACD. It is described in

guppytraders.com

Once there search for TSI.

Like MACD, TSI uses two exponential moving averages, but in series. This is then normalized to convert it to a bounded indicator. I also changed the + and -25 thresholds to + and -50 in the small parameter version. The TSI formula also uses the 1 day rate of change of the closing price at the fron end.

Interpretation is the same as for any other bounded indicator. exursion above the upper threshold line indicate and overbought condidion. excusions below the lower threshold line indicate an ovesold condition.

Using the same moving average on TSI and on the price gives a heads up at certain trend reversals. The crossing of the indicator over its moving average preceeds the crossing of the price over its moving average. For this to happen the price must/should be trending. In a range bound setting all bets are off.

Also tightening the MA to a lower value tends to intensify the heads up signal.
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