Mawreez' Trend Oscillator

2019년 10월 17일

A positive reading indicates an uptrend, a negative reading indicates a downtrend. For an uptrend, increasing values indicate that the trend is sustaining or strengthening while decreasing values indicate that the trend is stagnating or weakening. Vice versa for a downtrend. When the indicator reads 0, the price is not trending.

This indicator is based on the existing DMI indicator, but familiarity with the DMI is not required. The author's goal was to make a less laggy, more intuitively interpretable indicator compared to the DMI.

A comparison to the DMI is given above. The reader may see for themselves that trends are recognized quicker. A technical rundown of adjustments made to the DMI is given below.

Instead of interpreting the ADX, a sensitivity setting is added and its default value is 25. The value of this sensitivity setting is subtracted from the ADX. Then, any ADX values which fell below 0 are set to 0. Now, just flip the value of the ADX when the -DI is greater than the +DI. The result is then plotted as a histogram.

In addition, this indicator has less lag between price action and trend recognition. This is achieved by removing the EMA applied to the ADX, and instead applying lag-free smoothing to +DI and -DI before computing the ADX and then once more applying lag-free smoothing to the result of the computation.