The Absolute Strength (AS) is intended to chart the current and historical gain or loss of an underlying based on the closing prices of a recent trading period. It is based on mathematical decorrelation. It shows absolute strength momentum.
This indicator is not measured on a scale like Relative Strength (RSI). Shorter or longer timeframes are used for alternately shorter or longer outlooks. Extreme high and low percentage values occur less frequently but indicate stronger momentum of the underlying.
The Indicator can be used for following purposes:
- Support indicator for technical analysis as combination with Relative Stenght (RSI)
- information indicator to realize which underlyings are being demanded, this is ideal indicator for trend follow traders
- help for scalpers looking for strength trend
- Trader can see both absolute and relative strength
- Crosspoints can be used for trend continuation or other signals
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