TRIX index is calculated by calculating the cubic exponential moving average of price series, so as to reduce the noise of price fluctuation and show the market trend more clearly. The formula of TRIX index is as follows:
TRIX(n)= moving average (EMA(EMA(CLOSE, n)))
Where n is the time period for calculating the TRIX index and CLOSE is the closing price. EMA stands for exponential moving average, which is a weighted average method of price series.
TRIX indicators have three main uses:
1. trend identification: when the TRIX indicator rises, it indicates that the market is in an upward trend; When the TRIX index falls, it shows that the market is in a downward trend.
2. Reversal signal: When the TRIX indicator changes from an upward trend to a downward trend, it may be a bearish reversal signal; When the TRIX indicator changes from a downward trend to an upward trend, it may be a bullish reversal signal.
3. overbought and oversold: When the TRIX indicator enters the overbought area (usually between+15% and +35%), it indicates that the market may be overbought and the price may fall; When the TRIX indicator enters the oversold area (usually between-15% and -35%), it indicates that the market may be oversold and the price may rise.
It should be noted that TRIX indicators, like other technical analysis indicators, cannot be used alone, and need to be comprehensively analyzed in combination with other indicators and fundamental information. At the same time, in different markets and different time periods, the application methods of TRIX indicators may be different. In practical application, investors need to adjust according to their own experience and market environment.