The Triple Exponential Average (TRIX) indicator is one of the oscillatory momentum and trend indicators developed by Jack Hutson in the early 1980s. This indicator is basically a very choppy three exponential moving average (EMA) in the construction of George Apple’s MACD indicator because it uses three smoothing times to filter out false signals and minor price movements in current trends.
TRIX also generates trading signals in the same way as MACD. While the signal line can also be used to provide cross-line signal and direction bias. Because the TRIX indicator uses triple smoothing (three times the smoothing), making it a lagging indicator; However, bullish and bearish divergences can be used to determine potential price and trend reversal before it occurs.
TRIX is calculated by smoothing three times the exponential price of the closing price and then applying a percentage of RoC (rate of change) on the EMA that has been passed three times. In other words, TRIX is the RoC Percentage of EMA from EMA of EMA. The signal line, which is another EMA, can also be applied to the result. Then, the result is a set of two lines that are above and below the zero line, just like MACD.
In essence, there are three interpretations of the TRIX indicator, all of which are very similar to MACD. This is:
Cross the line zero; and
Bullish and Bearish Divergences
The crossed signal line represents a point of reversal on TRIX. A bullish signal occurs when the TRIX crosses above the signal line and a bearish signal occurs as the TRIX crosses below the signal line. This crossover usually indicates a trend reversal.
Since the TRIX indicator is oscillating around the zero line, it provides a zero line or signal across the zero line. When TRIX crosses above the zero line, it turns positive. This indicates that the trend has changed bullish. When TRIX crosses below the zero line, it turns negative. This indicates that the trend has turned bearish.
TRIX can also generate divergence opportunities, whose rules are the same as normal divergence readings.