It is a momentum indicator that shows traders the percentage change in the moving average that has been smoothened exponentially three times. The TRIX is a powerful indicator that helps traders to identify the overbought and oversold conditions in an underlying financial market.

In this Article 

• What is Triple Exponential Average? 

• How To Analyse Chart Using Triple Exponential Average 

Category 

Momentum/trend 

Type

Lagging

What is the Triple Exponential Average? 

Also known as TRIX, the triple Exponential Average is a technical analysis tool that helps traders determine the momentum of a price. Besides, traders also use it to identify the overbought and oversold conditions. 

Developed in the 1980s by Jack Hutson, it shows the rate change in a triple exponentially smoothed MA. The triple smoothening of MA helps filter out price movements that are considered insignificant. 

Technical traders use this indicator to produce signals similar to the Moving Average Convergence Divergence or MACD. 

How To Analyse Chart Using the Triple Exponential Average 

As mentioned above, TRIX can be used as an oscillator and a trend-following indicator. As the latter, negative TRIX values denote that a downtrend is in place. Conversely, positive TRIX values imply that an uptrend is in place. Sometimes the TRIX runs along the ‘0’ line. It indicates that the market stance is neutral. 

The TRIX, as an oscillator, is used to watch out for oversold and overbought market conditions. While extreme negative values denote oversold market conditions, extreme positive values point towards overbought conditions. 

Here are some of the TRIX trading signals that traders can use. 

Zero Line Cross 

If the TRIX crosses from below the ‘0’ line, it implies that the impulse is growing in the market, and traders can place buy orders in the market. Similarly, a cross in the ‘0’ line from above signals a shrinking impulse in the market. Thus, traders can start seeking opportunities to place sell orders. 

Signal Line Cross 

A signal line is basically a MA of the TRIX. When the TRIX crosses the signal line from below, it is a signal for the traders to buy. Conversely, when the TRIX crosses the signal line from above, it signals the traders to sell. 

Divergences 

Traders can use divergences to identify when significant turning points can occur in the market. Divergences occur when the price moves in the opposite direction as the TRIX indicator. When TRIX makes lower highs and the price makes higher highs, it indicates that a bearish reversal is about to occur. Conversely, when a TRIX makes higher lows, but the price makes lower lows, it signals that a bullish reversal is about to occur.