Trend Equilibrium Indicator Parameters and Overbought Signals
Summary
The Trend Equilibrium indicator is presented as a momentum and volatility measure with adjustable lookback periods and a scaling factor. The document recommends a momentum period of 14 candles and notes that increasing this period smooths the curve while adding lag. It also gives a recommended volatility period of 14 candles and a default scaling factor of 100000 to make the indicator curve readable.
The indicator uses thresholds of 100 and -100 to flag overbought and oversold conditions. These states are described as possible signs of a coming price correction or recovery, respectively. The document provides parameter guidance and a basic interpretation, but it does not specify the calculation formula, test the signals, or explain how to combine them with other evidence. Its threshold signals therefore should be treated as prompts for further analysis rather than demonstrated forecasts.
Key ideas
- The indicator uses momentum and volatility lookback periods to shape its output.
- A longer momentum period makes the curve smoother but introduces more lag.
- The default overbought and oversold thresholds are 100 and -100.
- Overbought and oversold readings suggest possible corrections or recoveries, but no validation is provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.