This indicator is an offspring of the Relative Strength Index (RSI). A momentum-based indicator, QQE helps determine trends and sideways. In essence, it is a heavily smoothed RSI. While it is not an exceedingly popular indicator among traders, it can yield various benefits for them.
In This Article
What is Qualitative Quantitative Estimation?
How To Analyze Chart Using the Quantitative Qualitative Estimation
Category
Momentum/Trend
Type
Leading/Lagging
This momentum-based indicator works as a smoother version of the famous Relative Strength Index. It expands on RSI by adding two vitality-based trailing stop lines.
These lines comprise a fast and slow Average True Range (ATR). As these ATR lines are smoothed, the QQE indicator is less susceptible to short-term volatility.
This indicator works by observing the interaction between both the fast and slow-moving trailing stop lines. Since it consists of two lines, the QQE is more versatile than one-line indicators like the RSI and CCI.
The most common method of analyzing a chart using QQE is to look for the fast and slow-moving trailing stop lines during periods when the Qualitative Quantitative Estimation line reflects oversold or overbought conditions.
If the QQE line is above 50, the trend is ascending. It indicates a bullish market.
If the QQE line is below 50, the trend is descending. It shows a bearish market.
You can also look for signals when there’s a crossover between Fast ATR and Slow ATR.
If the Fast ATR line crosses above the Slow ATR line, it is a signal to buy.
If the Fast ATR line crosses below the Slow ATR line, it is a signal to sell.
You can use this indicator to detect price and momentum divergence on a chart.
In a bearish divergence, QQE sets lower highs, and prices set higher highs. It may signal an upcoming bearish reversal.
In a bullish divergence, QQE sets higher lows while prices set lower lows. It may signal an upcoming bullish reversal.