Using Relative Strength or Ratio Analysis

Whether we decide to use a standard curve or a nominal curve in the analysis depends on clear access to a volume histogram plotted with a simple trend line (or as here a moving average) in order to detect the volume trend. Sometimes, however, the volume trend is not so easy to detect, as in the left side of Figure 11.11. In such cases it's possible to use relative strength or ratio analysis. Ratio analysis is where one data set is divided by another so as to compare the relative strength of the two.

In Figure 11.11, for example, we see a standard volume pane (top) with a 50-period moving average. The lower price pane contains weekly data of the EUR/CHF continuous futures cross, with a standard (solid) ...

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