Swiss market technicians Etienne Botes and Douglas Siepman introduced the vortex indicator in the January 2010 issue of the magazine, “Technical Analysis of Stocks and Commodities.” Since then, the new technical indicator has gained traction as a reliable trend following indicator that can produce surprisingly accurate buy and sell signals. However, it will take a few more years of market testing and experience to fully evaluate the vortex indicator’s potential.
What is the Vortex Indicator? The vortex indicator plots two oscillating lines, one to identify positive trend movement and the other to identify negative price movement. Crosses between the lines trigger buy and sell signals that are designed to capture the most dynamic trending action, higher or lower. There’s no neutral setting for the indicator, which will always generate a bullish or bearish bias.
Indicator construction revolves around the highs and lows of the last two days or periods. The distance from...
