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Swing Index
Description
The Swing Index seeks to isolate the "real" price of a security by
comparing the relationships between the current prices (i.e., open,
high, low, and close) and the previous period's prices.
The Swing Index requires opening prices.
Although it is beyond the scope of the manual to completely define
the Swing Index, the basic formula is shown below. Step-by-step
instructions on calculating the Swing Index are provided in Wilder's
book, New Concepts In Technical Trading Systems.
Wilder notes the following characteristics of the Swing Index.
- It provides a numerical value that quantifies price swings.
- It defines short-term swing points.
- It cuts through the maze of high, low, and close prices and
indicates the real strength and direction of the market.
Refer to the Accumulation Swing Index
for additional interpretational information regarding the Swing
Index and the "limit move".
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