Discussion in 'Technical Analysis' started by jj2005, Sep 11, 2006.
Is it the same as MACD with 3 bar moving average minus 10 bar moving average and 16 bar signal line?
Yes, using simple moving averages.
Maybe it's similiar to MACD conceptually , but that's about it.
The MACD default is 12-26-9. The signal line being shortER, and using exponential averages.
Ed Seykota wrote an article in the March 1991 issue of Futures magazine about the MACD arriving at a host of less than stellar conclusions.
The 16 SMA obviously considerably lags the 3 & 10 differential.
The 16 SMA, NOT a signal line but rather defines the intermediate trend.
The key to the indicator is what Raschke terms the "first cross".
As an example, if the 16 crosses down below zero, then shortly thereafter the difference of the 3 to 10 SMA's well above zero then ..............turning down, is excellent divergence for a short sale.
In esscence, though lagging, the 16 SMA actually "leads" in terms of trend.
Everyone is watching the SAME thing. OHLC. When you use canned indicators (like everyone else) you get results like everyone else. The bell curve.
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