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Indicator Guide > Indicator Basics > Indicator Time Frames

Indicator Basics: Time Frames

Indicators should be adjusted to reflect the cycle being studied.

The same general rule applies to moving averages and oscillators. Alexander Elder (in Trading for a Living), however, gives useful advice for when in doubt:

  • With trend indicators, make the window period longer;
  • With oscillators, make the period shorter.

Moving Averages

Use moving averages (MA's) that are half the length of the cycle:

  • 200 Day (40 Week) MAs are popular for tracking longer cycles;
  • 20 to 65 Day ( 4 to 13 Weeks) MAs are useful for intermediate cycles; and
  • 5 to 20 Days for short cycles.

Momentum Indicators

Use windows that are half the length of the cycle.

Martin Pring ( in Technical Analysis Explained) stresses the importance of using several windows with momentum indicators, in order to highlight patterns occurring in different time frames. He offers the following guidelines:

  • Primary trend: 12 (recommended), 18 or 24 months;
  • Intermediate cycle: 3, 6 or 9 months (13, 26 or 39 weeks); and
  • Short cycle:10 to 30 days.

Cycles often vary in length - regularly check that the window that you are using is still appropriate.



 
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