Description
The TAC_DIMinus study is a technical indicator which helps identify market tops. 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_DIMinus plots three lines, each being the DI- component of the DMI with a certain length; signals are given when the three lines cluster in the bottom of the subgraph. The basic rule of using TAC_DIMinus 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 bearish reversal is suggested when the cluster turns up from level 5.
For stronger signals, use TAC_DIMinus along with TAC_ADX. For double confirmation that a market top is formed, look for TAC_DIMinus 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 |
|---|---|
DIMinus1
|
The first DI- plot. |
DIMinus2
|
The second DI- plot. |
DIMinus3
|
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.