TAC_DIPlus

Description

The TAC_DIPlus study is a technical indicator which helps identify market bottoms. Being part of a system described in BC Low's article "Identify the Start of a Trend with DMI", it gives especially strong signals when used in combination with TAC_ADX.

TAC_DIPlus plots three lines, each being the DI+ component of DMI with certain length; signals are given when the three lines cluster in the bottom of the subgraph. The basic rule of using TAC_DIPlus is finding clusters at or below the basic reference level of 10; when the lowest line reaches level 5, it is supposed a stronger signal. The confirmation of the bullish reversal is suggested when the cluster turns up from level 5.

For stronger signals, use TAC_DIPlus along with TAC_ADX. For double confirmation that market bottom is formed, look for TAC_DIPlus clusters in 5..10 range when TAC_ADX turns down from level 90.

Input Parameters

Parameter Description
di length1 The number of bars used to calculate the first DI+ plot; normally the lowest of the three.
di length2 The number of bars used to calculate the second DI+ plot; normally the middle one.
di length3 The number of bars used to calculate the third DI+ 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
DIPlus1 The first DI+ plot.
DIPlus2 The second DI+ plot.
DIPlus3 The third DI+ plot.
Level50 Level 50.
Level10 Level 10.
Level5 Level 5.

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.