Trix (or TRIX) is a technical analysis momentum indicator known as the Triple Exponential Average. It is used by traders to identify trends, potential price reversals, and overbought or oversold market conditions. TRIX smooths price data by applying an exponential moving average three times, which filters out insignificant price movements, making its signals smoother than other indicators like the MACD. The TRIX line oscillates around a zero line: a positive value suggests an increasing momentum or bullish trend, while a negative value indicates decreasing momentum or a bearish trend. Crossings of the TRIX line above or below zero, or its signal line, are interpreted as buy or sell signals. TRIX also helps in spotting divergences between price and momentum, indicating possible turning points in the market.
Key Characteristics of TRIX
- Developed in the 1980s by Jack Hutson.
- Calculated by triple smoothing the exponential moving average (EMA) of a price series, then measuring the percentage change between periods.
- Used as both an oscillator and a momentum indicator.
- Filters out short-term price noise to focus on underlying trends.
- Typically displayed below the main price chart as a sub-chart.
How TRIX Is Used in Trading
- Cross above zero: signals potential bullish move.
- Cross below zero: signals potential bearish move.
- Cross above/below signal line: predicts price direction shift.
- Divergences with price can indicate upcoming market reversals.
This makes TRIX a valuable tool for technical traders seeking to assess trend strength and timing in financial markets.
