A Pretty Neat Intra-day Indicator
How to use the TICK for an entry point or day trading ...
If you have ever looked at the TICK, it pretty much looks like "noise". With extremely lengthy bars on minute to daily data, it seems like useless data to many. Chart 1 below is an example of TICK data.
While doing research a few years ago, we tested moving averages on the daily ticks as well as many time intervals in minutes.
It was always useless data UNTIL ... we viewed the TICK in "1 minute" intervals and then set a smooth moving average of 80 that magical data appeared.
Take a look at the second chart below. It is a 1 minute chart over a 3 day interval. Actually, it is the SAME chart as above, except we show a "smoothed moving average of 80" instead of the ticks. And then, we drew two horizontal lines at the zero level.
Above the horizontal &line is positive, below is negative, and on the line is neutral.
In the chart, we overlaid the action of the SPY so that you can compare the 80 SMA TICK movements to the index.
Note the blue arrows ... when the 80 MVA green TICK line rises above the horizontal lines, it is a trend change signal for the SPY to reverse its trend.
When the 80 MVA green TICK line moves below the horizontal lines, it is a trend change signal to the downside.
As an intra-day trend change indicator, it isn't perfect, so we use additional indicators with it. But, even as shown below, it has a pretty neat correlation relative to the SPY and other indexes.