Description
The TAC_ADX study is a technical indicator which attempts to provide start and end points of strong trend based on clusters of ADX plots. According to BC Low's article "Identify the Start of a Trend with DMI", this indicator should be used along with TAC_DIPlus and TAC_DIMinus to get the full picture of trending conditions. Prefix "TAC" stands for "Triple ADX Cluster" as all three indicators used in BC Low's system are plotted three times using different lengths.
Three lines of TAC_ADX turning up after converging below the level of 30 might indicate the start of the trend. On the other hand, turning down above the level of 70 might suggest a termination or a retracement. A stronger signal for the trend start might be given if the level of 20 is used instead. In an exceptionally strong trend, the termination is more likely to happen if clustering occurs above the level of 90.
Note that TAC_ADX is also used with TAC_DIPlus and TAC_DIMinus in order to identify market bottoms and tops, respectively. For more information on that, refer to the corresponding articles.
Input Parameters
| Parameter | Description |
|---|---|
adx length1
|
The number of bars used to calculate the first ADX plot; normally the lowest of the three. |
adx length2
|
The number of bars used to calculate the second ADX plot; normally the middle one. |
adx length3
|
The number of bars used to calculate the third ADX plot; normally the highest of the three. |
average type
|
The type of moving average to be used in calculations: simple, exponential, weighted, Wilder's, or Hull. |
Plots
| Plot | Description |
|---|---|
ADX1
|
The first ADX plot. |
ADX2
|
The second ADX plot. |
ADX3
|
The third ADX plot. |
Level90
|
Level 90. |
Level70
|
Level 70. |
Level30
|
Level 30. |
Level20
|
Level 20. |
Further Reading
1. "Identify the Start of a Trend with DMI" by BC Low. Technical Analysis of Stocks & Commodities, November 2012.
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.