Description:
The Stochastic Momentum Index (SMI) is a technical analysis tool first developed by George Lane in the 1950s. The stochastic oscillator is used to measure the strength of an asset’s price trend, and it is based on the premise that a price trend is more likely to continue than to reverse.
Input Parameters:
- %K Length: The %K line represents the current closing price as a percentage of the price range over a specified period, typically 14 days.
- %D Length: The %D line is a moving average of the %K line, usually calculated as a 3-day simple moving average.
Use Case:
- Buy/Sell Signal: When the %K line crosses above the signal line, it is considered a buy signal, indicating that the market is likely to experience a bullish movement. When the %K line crosses below the signal line, it is considered a sell signal, indicating that the market is likely to experience a bearish movement.
- Overbought/Oversold: When the SMI line is above +40, it is considered overbought, indicating that the asset’s price may be due for a correction. When the SMI line is below -40, it is considered oversold, meaning the asset’s price may be expected to rebound.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.