What is a Directional Moving Index?
The Directional Movement Index (also known as DMI) is a momentum indicator developed by J. Welles Wilder. The DMI is actually part of a series of technical indicators developed by Wilder, so some trading platforms split up the indicators, providing Directional Movement as one indicator and ADX as another. DMI tells you when to be long or short. It is especially useful for trend trading strategies because it differentiates between strong and weak trends, allowing the trader to enter only the strongest trends.
Continue reading “The Series of Technical Analysis Studies Chapter 5: “Directional Moving Index””
What is Keltner Channel?
Originally developed by Chester Keltner in the late 1950’s, the Keltner channel indicator belongs to a family of Technical analysis tools called envelop indicators. Keltner Channels are volatility-based envelopes set above and below an exponential moving average. This indicator is similar to Bollinger Bands, which use the standard deviation to set the bands.
Continue reading “The Series of Technical Analysis Studies Chapter 4: “Keltner Channel””
What is an Average True Range?
The average true range is a volatility indicator. It measures the average of true price ranges over time. The True Range is the greatest distance between today’s high to today’s low, yesterday’s close to today’s high, or Yesterday’s close to today’s low.
Continue reading “The Series of Technical Analysis Studies Chapter 3: “Average True Range””
What is an Exponential Moving Average?
The Exponential Moving Average (EMA) is similar to SMA but EMA gives more importance to recent price data than the simple moving average. It responds more quickly to recent price changes than SMA.
Continue reading “The Series of Technical Analysis Studies Chapter 2: “Exponential Moving Average””