Ekambit Strength Index (ESI)

ESI indicator makes it easy to identify trends and reversals using weighted multi-timeframe comparisons in a single chart.

We at Ekambit Technologies use it daily with consistent success in Indian markets, especially with NSE:NIFTY and NSE:BANKNIFTY.

Usage

1. Above mid-zone & rising: uptrend
2. Falling from high-zone: uptrend reversal
3. Below mid-zone & falling: downtrend
4. Rising from low-zone: downtrend reversal

Apply the same indicator to NSE:INDIAVIX (in the same chart!) or up to 3 correlated instruments to gain greater conviction for your trades, as shown in the chart.  In addition to the chart timeframe, optionally 3 higher weighted timeframes can be used in ESI computation.

In effect, ESI is a single indicator which provides an insight of 16 indicators (4 timeframes * 4 instruments).

Limitations

• ESI can be applied on any time frame, as shown below.  This idea was initiated at 13:30 IST on 29-May based on ESI.  The chart has moved further since, and you can already see its accuracy until market close on 29-May.

• However, longer term movement involves "overnight/weekend" and "event" risks which cannot be predicted using any form of Technical Analysis.  This is the reason we are currently developing the Ekambit Comprehensive Index (ECI) indicator.
• So before coming to any conclusions for the longer term as shown in the chart, apply other factors before initiating a trade.
• Based on our backtesting and proven results, ESI is good for the short-term when probability of non-price action risks are lower.

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Additional resources

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