The Traderszone Network

Published in TZ Latest News 1 October, 2014 by The TZ Newswire Staff

Oversold Readings On The TRIN

The TRIN or Short-Term TRading INdex, better known as the Arms Index, is a breadth indicator that was developed by Richard Arms in 1967. The index is calculated by dividing the Advance-Decline┬áRatio by the Advance-Decline Volume Ratio. Because it is an oscillator, we can use it to identify short-term overbought and oversold conditions. Looking at the TRIN chart below, I’ve identified areas of oversold readings (red bars) and then annotated the corresponding oversold readings with price using the blue bars. I used a reverse scale on the TRIN so it is more intuitive.

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