Daedalus
Add-on v.II
Basic Features
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Finding the Correct Long Term Trend of the Price Using the Price Movement Itself for Finding Support/Resistance Levels |
Daedalus is a Metastock® add-on providing both basic and advanced Technical Analysis tools that help identify possible profitable trading opportunities. Daedalus add-on makes use of the most powerful tools of Metastock® software and provides 13 external dll-indicators, 2 Experts along with 2 corresponding Templates, 17 custom Indicators and 10 Sample Explorations. All components of Daedalus are primarily created to be used in DAILY charts and none of them can be used in INTRADAY charts. Two of its studies can be used in weekly charts.
The main objectives of the Daedalus add-on are:
Find the correct long term trend of the Price
Find pivot points (that is, price levels where there is a strong tendency of short or medium or even long term trend change).
Use the price movement itself for finding support/resistance levels for the Price and automatically evaluate the level using widely accepted tenets of Technical Analysis.
Find securities that have broken a significant support or resistance level and automatically evaluate the breakout signal.
What makes Daedalus differ from many other technical analysis software is its tremendous flexibility. Most of the indicators provided are supple to the most and offer the users the opportunity to experiment and suit Daedalus to their type.
It is known that the very long term trend of stocks is generally upward and that bearish or oscillating price movements are quite tricky. A smart long term strategy is to isolate the large bullish trends and take long positions. Knowing the correct long term trend also gives the opportunity to make Medium-Short term trades with Lower risk. Daedalus is equipped with the TCI indicator (Trend Character Index). The TCI is used in Daily Data and uses oscillators' behavior in conjunction with trend indicators to filter Bullish trends from non-Bullish trends. The TCI returns 4 possible values: +2 (means bullish market), -2 (means no-bullish market), +1 (means bullish market but also tendency to become non-bullish) and -1 (means non-bullish market but also tendency to become bullish). The TCI was at first created to be used as a general trend indicator in sector indices or large international indices like SP500, DJI, NASDAQ, DAX, FTSE100 etc. but as it turned out it has excellent results in many large stocks and Forex.
Daedalus is also equipped with the TCIinv indicator (TCI Inverse) which is an indicator created by reverse engineering the TCI. The TCIinv has the most complex mathematical formula from all Daedalus dll-indicators and returns a barrier needed to be broken by the next day's closing price in order to change TCI from +2 to +1 or from -2 to -1. So the user may always be alerted when The TCI is close to change its opinion about the market.
The TCI and TCIinv indicators take no parameters.
The daily chart of Hang-Seng below shows the performance of the TCI indicator via an expert (Blue bars correspond to TCI=2, cyan bars correspond to TCI=1, red bars correspond to TCI=-2 and orange bars correspond to TCI=-1. Three large simple moving averages (300-period colored white, 200 period colored purple, and 100-period colored black) are also plotted to show the excellency of the TCI indicator in identifying the big trends while minimizing whipsaws. (The quality of the image is reduced for quick viewing). More screen shots like the one below can be seen by clicking the Performance screen shots button form the Daedalus Add-on Homepage
Daedalus provides two external dll-indicators which at first resemble Bollinger Bands. These are UpperBand and LowerBand indicators (thereafter called as "Reaction Bands") and they are produced by reverse engineering Oscillators so their creation (but also their behavior) is different from Bollinger Bands and their main purpose is to provide possible short, medium or long term Resistance/Support Levels for the price mainly on oscillating markets. Reaction Bands have one parameter which deals with how much sensitivity the user wants. The parameter values range from 1 to 6.
The daily chart of Dow Jones below shows the performance of the Reaction Bands (colored red) of parameter 6. The yellow ellipses show the pivot points identified via the bands. (The quality of the image is reduced for quick viewing). More screen shots like the one below can be seen by clicking the Screen shots button from the Daedalus Add-on Homepage
In addition to the Reaction Bands studies, the Daedalus Add-on provides one more indicator (namely: Pivot Detector or simply PID) which can help in pivot identification. Whereas the TCI uses oscillators to filter trend indicators' signals and avoid whipsaws, the PID uses trend indicators to filter oscillators' signals and spot potential pivot points. The PID can be applied to any Daily of Weekly market data (not only stock indices) and offers some of the most timely signals one can have. The daily chart of SP500 below gives an idea of what the PID can do. The red arrows (signals) are generated by the PID.
More screen shots showing the performance of the PID indicator can be seen by clicking the Screen shots button from the Daedalus Add-on Homepage
Using the Price Movement Itself for Finding Support/Resistance Levels
Daedalus offers four external dll-indicators that can be used to provide the basic Support/Resistance levels for the Price or Price-Type indicators (like C, H, L, O (H+L)/2 etc. -see Basic Definitions &Terminology-) or even [0..100] Oscillators . The first two are SuppL (Support Level) and ResL (Resistance Level) and each one takes 6 parameters. The other two indicators are SuppLf (Support Level floating) and ResLf (Resistance Level floating) which are backward looking formulas for the SuppL and ResL indicators respectively. SuppLf and ResLf have one more parameter which specifies how many bars to backward look (this is critical for the calculation time).
SuppL and ResL indicators are somehow raw and provide no ranking of a support/resistance level. An obvious ranking of a support level is by the number of days it is intact (that is, not broken). There are nevertheless two more ways to rank the significance of a support level besides the obvious: First, by determining how many times the price attempted to break it downward without success and the magnitude of the downward trends that this level was able to stop. Second, by determining the possibility of a severe decline if it is broken. Similar ranking method may be used for resistance levels.
Daedalus offers two more indicators which find and rank support and resistance levels. These are SuppLSignINFO and ResLSignINFO respectively. These are INFO indicators which roughly means that they return information about the support/resistance found satisfying conditions defined by the user. SuppLSignINFO and ResLSignINFO are primarily created to be used in explorations and Experts. Each of these two indicators take 5 parameters and returns 5 information numbers.
Finding and Ranking Support/Resistance Breakouts
Daedalus has two indicators that deal with support/resistance breakouts. These are BreakSuppINFO and BreakResINFO. These are INFO indicators which roughly means that they provide information for breakouts and they are primarily used in Experts and Explorations. The user may explore a basket of securities to find breakouts satisfying specific conditions and then get information about them including the importance of the broken level the number of bars that have passed since the breakout, the maximum % distance the price traveled away from the broke level after the breakout etc.
The daily chart below shows an Expert implementing the BreakResINFO and SuppRSignINFO indicators. (The quality of the image is reduced for quick viewing).
