by deltayod » Mon Dec 20, 2010 4:30 pm
Thank You Apprentice for coding this indicator. You did it promptly and with an excellent result.
Humbly, I'd like to share what I've learned over time about the use of this indicator.
The Absolute Strength Indicator is an excellent tool to determine:
1.- Market Trend as well as the strength of the trend.
The Main Signal occurs when the Solid lines cross each other. Bulls over Bears signals long entries and vice versa. I consider this the most conservative entry point.
2.- Market Correction (Retracement and/or Reversal)
Correctional entry signals are my favorite. They occur when a Solid line crosses over it's corresponding Dotted line but before the main signal crossover (see picture attached)
3.- Market Consolidation (Moving sideways).
Another important aspect is the flatness of the market displayed by the lack of dominance of either bears or bulls. This occurs when both solids are under their corresponding dotted lines regardless of overall market sentiment (i.e., Bears over Bulls). When neither of the solid lines is over its corresponding dotted line, consolidation is taking place. It is too risky to trade and perhaps best to wait for either Correctional or Main signal.
Seek for the PIPS and you shall find them.
Regards,
Delta Yod
P.S. I have used successfully the following settings:
Method: RSI
Method: EMA
Period for Evaluation: 7 (10 or 14 work well too)
Period for Signal: 4
Period for Smoothing: 4
Overbought/Oversold: 0
- Attachments
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- Signals Generated by Absolute Strength Indicator