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Free to Download - Derivative Oscillator

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by , 03-10-2016 at 12:09 AM (5164 Views)
Constance Brown's Derivative Oscillator was published in her book "Technical Analysis for the Trading Professional". The oscillator uses a 14-period RSI . The RSI is then double smoothed with exponential moving averages . The default settings for the smoothing periods are 5 and 3. In a second step a signal line is generated from the smoothed RSI by calculating a simple moving average with a period of 9. The Derivative Oscillator is calculated as the difference between the smoothed RSI and the signal line and displayed as histogram.

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The formula is:
EMA(EMA(RSI(14), 5)), 3) - MVA(EMA(EMA(RSI(14), 5)), 3), 9)

The Derivative Oscillator is a triple smoothed RSI that incorporates two EMA's and one SMA. It was specifically developed to resolve problems associated with complex market corrections where data becomes choppy and congested. Second, it was developed for reentering when there is a very strong trend. Both problems would seem contradictive, but in fact it can be used as a guide in both environments. It is meant to be used with mentioned environments and not all the time. It is not recommended in time frames below 30min.

The article (pdf file about how to use this indicator for entry and exit) - attached (in RAR archive by 4 pages).
LUA script is attached too (inside file).
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