According to Dorsey, a bulge occurs when the Mass Index moves above 27.

Ideally, a downtrend followed by a reversal bulge would suggest a bullish trend reversal.

Conversely, an uptrend followed by a reversal bulge would suggest a bearish trend reversal.Stock Recommendations The example above shows Chipotle with the Mass Index producing two reversal bulges over a 12-month period.

It takes exceptional volatility to push the index above this level.gold signalsTweakingChartists can lower the threshold for a reversal bulge to generate more signals.

In other words, chartists may need to compare Mass Index levels over time to identify historical highs and lows.

A move that nears the high end of the historical range would suggest a volatility bulge that could foreshadow a reversal.gold signals The chart below shows International Paper with the Mass Index moving above 26 twice.

 Rate of Change (ROC)The Rate-of-Change oscillator measures the speed at which prices are changing.

Subsequent advances are usually less sharp and this causes a bearish divergence to form in the Rate-of-Change oscillator.

Positive readings may be less than before, but a positive Rate-of-Change still reflects a price increase, not a price decline.

Even with these lopsided boundaries, Rate-of-Change produces identifiable extremes that signal overbought and oversold conditions.gold signalsTrend IdentificationEven though momentum oscillators are best suited for trading ranges or zigzag trends, they can also be used to define the overall direction of the underlying trend.

This can be broken down into 125 days per half year, 63 days per quarter and 21 days per month.

Long positions taken 6 or 12 months ago would be profitable and buyers would be happy.Stock Recommendations Chart 2 shows IBM with the 250-day, 125-day, 63-day and 21-day Rate-of-Change.

Introduced by Igor Levshin in the August 2001 issue of Technical Analysis of Stocks & Commodities magazine, this indicator compares the power of buyers to push prices to higher extremes with the power of sellers to move prices to lower extremes.

When the indicator is in positive territory, the bulls are in charge; and sellers dominate when the indicator is negative.

A reading near the zero line indicates a balance between the two and can mean a trend reversal.Note: This indicator is sometimes referred to as Balance of Market Power (BMP).CalculationLivshin's original calculation method for the Balance of Power indicator is fairly complex, but can be reduced to a much simpler formula:BOP = (Close - Open) / (High - Low)Of course, using these raw daily values makes for a choppy oscillator, so the values are typically smoothed with a moving average.

Livshin recommends smoothing with a 14-period SMA, but the number of periods can be modified to fit the timeframe being charted.The resulting indicator oscillates between -1 and +1.

Like most oscillators, the Balance of Power indicator can be used to identify trends, divergences from price, and overbought/oversold conditions.

Zero-line crossovers indicate a move into positive or negative territory, and are often used as buy or sell signals.

  Ease of Movement InterpretationThe example below shows the Nasdaq 100 ETF (QQQ) with the 1-period EMV in the lower indicator window.

This implies that prices declined with relative ease and there was little or no buying pressure.

The chart below shows Jabil Circuit (JBL) with the 14-period Ease of Movement indicator.

This is just a 14-period simple moving average of each period's EMV value.gold signalsConfirming Other SignalsEase of Movement is best used to confirm other indicators or chart analysis.

EMV is generally positive when the midpoint rises and negative when the midpoint falls.

This means EMV will generally rise and fall along with the price of the underlying security.

   Price Relative / Relative StrengthThe Price Relative is used to gauge relative strength, which is important when it comes to stock selection.

Many portfolio managers compare their performance to a benchmark, such as the S 500.

In order to achieve this goal, managers often look for stocks that are showing relative strength.

This can be based on the actual trend, support/resistance breaks, moving averages or other indicators.

Second, chartists can look for bullish and bearish divergences in relative strength to warn of a potential reversal in the stock price.Trend IdentificationChartists can apply basic trend analysis or moving averages to determine the direction of the Price Relative.

Alternatively, a long-term uptrend could be present when the Price Relative is trading above its 150-day SMA.gold signals The chart above shows Hewlett-Packard (HPQ) with the Price Relative (HPQ:$SPX).

Second, there is the extent of the price change, which is simply the current close less the prior close.

Just how committed are the buyers and sellers?

The Force Index quantifies these three elements into one indicator that measures buying and selling pressure.gold signals Trend IdentificationThe Force Index can be used to reinforce or determine the trend.

Notice how a resistance breakout on the price chart corresponds to a resistance breakout on the 100-day Force Index.

Divergences are classic signals associated with oscillators.

Even though the security is moving higher, the indicator shows underlying weakness by moving lower.

   Price Channels Price Channels can be used to identify trend reversals or overbought/oversold levels that denote pullbacks within a bigger trend.

A surge above the upper channel line shows extraordinary strength that can signal the start of an uptrend.

Once an uptrend has started, chartists can move to a shorter timeframe to identify pullbacks with oversold readings.

A move below the lower channel line indicates oversold conditions that can foreshadow an end to the pullback.

For example, chartists can use weekly charts with 20-week Price Channels to determine the big trend and overall trading bias.The chart above shows weekly prices for the Nasdaq 100 ETF (QQQQ) over a 4 1/2 year period.

The green arrows mark weekly highs above the upper channel line that signaled the start of an uptrend.

  Money Flow Index (MFI)As a volume-weighted version of RSI, the Money Flow Index (MFI) can be interpreted similarly to RSI.

Theories suggest that volume leads prices.

A move above 90 is truly overbought and a move below 10 is truly oversold.

Links to such scans are provided at the end of this article.https://www.gold-pattern.com/en  JB Hunt (JBHT) became oversold when the Money Flow Index moved below 10 in late October 2009 and early February 2010.

The preceding declines were sharp enough to produce these readings, but the oversold extremes suggested that these declines were unsustainable.

The stock confirmed the second oversold reading with a resistance breakout on good volume.Aeropostale (ARO) became overbought when the Money Flow Index moved above 90 in late September and late December 2009.

The Perfect CycleThe image below shows a perfect cycle with a length of 100 days.

Notice that the cycle crosses the X-axis at 50, 100 and 150, which is every 50 points or half a cycle.Crest: Cycle highTrough: Cycle lowPhase: Position of the cycle at a particular point in time (the example cycle is at .95 on day 20)Inflection Point: This is where the cycle line crosses the X-axisAmplitude: Height of the cycle from X-axis to peak or troughLength: Distance between cycle highs or cycle lowsObserve that this is merely a blueprint for the ideal cycle; most cycles are not this well-defined.Cycle Characteristicsgold signals Cycle Length: Lows are usually used to define the length of a cycle and project the cycle into the future.

A cycle high can be expected somewhere between the cycle lows.Translation: Cycles almost never peak at the exact midpoint nor trough at the expected cycle low.

Right translation is the tendency of prices to peak in the latter part of the cycle during bull markets.

Conversely, left translation is the tendency of prices to peak in the front half of the cycle during bear markets.

The inverse is also true.