This is a very messy chart of my own creation. I don't often resort to putting these up because they are messy and require careful interpretation.It shows 5 Day SMA (yellow line), 13-Day SMA (Orange Line) and 21 Day SMA (Green Line) of a variation of Alexander Elders Force Index. The Force Index (eliminated from the chart) is an oscillator calculated by multiplying the advance or decline in the XAO by the volume. My variation is to multiply the advance or decline not by volume but by turnover. Volume on the Australian market can be skewed by massive activity in one stock such as occurred last year with GPT. Turnover, however, is a more stable artefact.
A divergence on the Yellow Line (5-Day MA) suggests a fall may be coming. The divergence relates to the highs posted on the XAO around 23-25 March and the current high.
A clear break by the Green 21-Day MA (which is currently very steep) below its uptrend line would constitute a sell signal. A clear break by the 21-Day MA below the zero line would be a sell short signal.
I hope that is clear.
Cheers
Red
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