Indicator - Stochastic Momentum Index
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Definition Stochastic Momentum Index
This indicator represents the position of the close relative to the median point whereas the traditional stochastic represents the position of the close relative to the highest and lowest points. We use a double smoothing with an exponential moving average so that the signals are more consistent.
Interpretation Stochastic Momentum Index
The SMI gives good divergence signals.
A sell signal is given when a bearish divergence appears. A bearish divergence occurs when the stock price makes new highs while the SMI fails to make new highs.
A buy signal is given when a bullish divergence appears.\n A bullish divergence occurs when the stock price makes new lows while the SMI fails to make new lows.
