A Smoothed Trend Oscillator for DAX 40 Futures

Summary

This document explains a trend-detection oscillator adapted for the DAX 40 futures market. It locates the high and low over a lookback period, expresses the close’s position within that range as a basic trend measure, then smooths that measure with an exponential average. A second exponential average acts as a signal line; the difference between the smoothed trend and that line forms a histogram. The example specifies a 20-period detection window and an 8-period signal average.

The display uses the histogram’s sign, direction of change, and the trend line’s position relative to a negative 50 level to color-code conditions. The author suggests focusing on the smoothed trend line and describes crosses as potential entry or exit cues. No backtest, trade examples, or performance statistics are supplied, so the colors and crosses are interpretive aids rather than validated signals. The parameters are presented for the DAX 40 and may require adjustment for other markets or trading plans.

Key ideas

• The oscillator measures the close relative to the recent high-low range.
• An exponential average smooths the measure, and a second average provides a signal line.
• The histogram is the difference between the smoothed trend and its signal line.
• Color conditions combine histogram direction and the trend’s position around negative 50.
• The stated settings are tailored to the DAX 40, and no performance validation is given.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.