This indicator measures the vertical distance form the current close to the MA of your choice. I find that it does not work best as an oscillator, but it works well for providing early signals for taking profits when trend continuating. For example, if you go short due to a retracement to the MA (of your choice) take profits when a bearish trendline
is broken (signalling the start of a bullish
correction) that corresponds to the highs of the chart. The logic behind this indicator is that the breakouts of trendlines
of an assets difference from an MA will precede corresponding breakouts of trendlines
drawn on raw price. Kind of like Momentum, except it takes trend into account. Momentum has the same leading feature when it comes to drawing trendlines
, but trendlines
will be harder to draw due to the Momentum indicators oscillatory behavior.