Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Terry Mitchell who wrote (7696)	1/10/1998 8:48:00 AM
From: Chandler H. Everett	Respond to of 12039

Terry........welcome aboard......VHF and AroonUp are canned indicators in MetaStock 6.5....the trouble with a "story" stock is that the story keeps changing. The signals you get from TA don't. BW Chan

To: Terry Mitchell who wrote (7696)	1/10/1998 2:53:00 PM
From: Richard Estes	Read Replies (1) \| Respond to of 12039

found in MSWIN 6.5 and WOW 5.0. I will let EQuis tell you: The Vertical Horizontal Filter (VHF) determines whether prices are in a trending phase or a congestion phase. The VHF compares the sum of a one period rate-of-change to the range between high and low prices over the specified period. The age-old problem for many trading systems is their inability to determine if a trending or trading range market is at hand. Trend-following indicators such as MACD and moving averages, tend to be whipsawed as markets enter a non-trending congestion phase. On the other hand, oscillators (which work well during trading range markets) tend to overreact to price pull-backs during trending markets. The VHF indicator attempts to remedy this by measuring the "trendiness" of a market. MetaStock prompts you to enter the number of periods to use in the calculation. The default value is 28. There are three ways to use the VHF indicator: 1) VHF values above or below certain levels indicate the degree of trending. The higher the VHF, the higher the degree of trending. 2) The direction of the VHF can be used to determine whether a trending or congestion phase is developing. A rising VHF indicates a developing trend; a falling VHF indicates that prices may be entering a congestion phase. 3) The VHF as a contrarian type indicator. Expect congestion to follow high VHF values. Low VHF values may indicate a trending phase will soon follow. The Aroon indicator was developed by Tushar Chande. Aroon is Sanskrit word "dawn's early light" or the change from night to day. The Aroon indicator allows you to anticipate changes in security prices from trending to trading range. For more information on the Aroon indicator see the article written by Tushar Chande in the September 1995 issue of Technical Analysis of Stocks and Commodities magazine. These changes are anticipated by measuring the number of periods that have passed since the most recent x-period high and x-period low. Therefore, the Aroon indicator consists of two plots; one measuring the number of periods since the most recent x-period high (Aroon Up) and the other measuring the number of periods since the most recent x-period low (Aroon Down). The actual plotted value is a "stochastic" like scale (see Stochastic Oscillator) ranging from 0 to 100. Assuming a default time-period of 14 days, if a security makes a new 14-day high, the Aroon Up = 100; when the security makes a new 14-day low, the Aroon Down = 100. When the security has not made a new high for 14 days, the Aroon Up = 0; when the security has not made a new low for 14 days, the Aroon Down = 0. As explained in the interpretation section for the VHF indicator (see Vertical Horizontal Filter) the age-old problem for many trading systems is their inability to determine if a trending or trading range market is at hand. Trend-following indicators such as MACD and moving averages, tend to be whipsawed as markets enter a non-trending congestion phase. On the other hand, overbought/oversold oscillators (which work well during trading range markets) tend to overreact to price pull-backs during trending markets-thereby closing a position prematurely. The Aroon indicator attempts to remedy this by helping you determine when trend-following or overbought/oversold indicators are likely to succeed. There are basically three conditions that you look for when interpreting the Aroon indicator: extremes at 0 and 100, parallel movement between Aroon Up and Aroon Down, and crossovers between Aroon Up and Aroon Down. Extremes. When the Aroon Up line reaches 100, strength is indicated. If the Aroon Up remains persistently between 70 and 100, a new uptrend is indicated. Likewise if the Aroon Down line reaches 0, potential weakness is indicated. If the Aroon Down remains persistently between 0 and 30, a new downtrend is indicated. A strong uptrend is indicated when the Aroon Up line persistently remains between 70 and 100 while the Aroon Down line persistently remains between 0 and 30. Likewise a strong downtrend is indicated when the Aroon Down line persistently remains between 70 and 100 while the Aroon Up line persistently remains between 0 and 30. Parallel Movement. When the Aroon Up and Aroon Down Lines move parallel with each other (are roughly at the same level), then consolidation is indicated. Expect further consolidation until a directional move is indicated by an extreme level or a crossover. Crossovers. When the Aroon Down line crosses above the Aroon Up line, potential weakness is indicated. Expect prices to begin trending lower. When the Aroon Up line crosses above the Aroon Down line, potential strength is indicated. Expect prices to begin trending higher.