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Technical Analysis: Power Tools for Active Investors by Gerald Appel

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Using a Somewhat More Sensitive Rate of Change Measure of the Advance-Decline Line

The Ten-Day Rate of Change Indicator

Although the 21-day rate of change of the advance-decline line probably represents more significant changes in market momentum, the 10-day rate of change has its uses as well.

As you can see in Chart 6.6, the parameters of the 10-day rate of change tend to be somewhat narrower than the parameters of the 21-day rate of change indicator. Although readings of +/–10,000 sometimes are reached on a ten-day basis, for the most part, rates of change for that time frame tend to vary between +5,000 (overbought) and –5,000 to –8000 and even lower (oversold).

Chart 6.6. The Standard & Poor’s 500 Index Advance-Decline Line and Ten-Day ...

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