What is the TRIX Indicator?
The Triple Exponential Average (TRIX), created by Jack Hutson in the early 1980s, TRIX has become popular since it helps in spotting diversions and directional cues. TRIX is a technical momentum indicator that displays the percentage change in a triple exponentially smoothed moving average. When used to triple smoothing of moving averages, it is intended to filter out price fluctuations that are deemed minor or irrelevant.
What is Trix technical indicator?
How to use the TRIX indicator?
When TRIX is applied as a momentum indicator, a positive number indicates an overvalued market, and while a negative value indicates an oversold market. When the TRIX values run parallel to the 0 value (centerline), the market is in a neutral position. Many experts think that when the TRIX crosses above the zero line, a buy signal is generated, and when it closes below the zero line, a sell signal is generated. Also, divergence between price and TRIX can signify important market turning points.
How to Calculating TRIX?
It is a four step process to calculate TRIX. The indicator is “triple smoothed,” which means we are taking a moving average of a moving average of a moving average.
- 15-period exponential moving average (EMA) using closing prices.
- 15-period EMA of result from step 1
- 15-period EMA of result from step 2
- 1-period percent change of step 3
- Step 4 is the TRIX, which will fluctuate from period to period
Types of TRIX indicator signals
Bullish: Whenever TRIX crosses above the 0 line and the price seems to be reversing to an uptrend by forming either trend line breaks or higher highs and higher lows, it points to an upcoming bullish move.
Bearish: Whenever the TRIX indicator crosses below the 0 line and the price seems to be reversing to a downtrend by forming either trend line breaks or lower highs and lower lows, it points to an upcoming bearish move.
Bullish Divergence: Whenever the TRIX indicator forms higher lows and the price forms lower lows, a bullish divergence is formed. Usually, the price surges up after the bullish divergence.
Bearish Divergence: Whenever the TRIX indicator forms lower highs and the price forms higher highs, a bearish divergence is formed.