Introduction
It has often been said that prices fall faster than they rise, or simply
put, it is easier to ride a bike downhill than uphill. Due to this
perceived quirk in pricing, the legendary market analyst, author, and
seminar speaker Jake Bernstein developed the 10x8 moving average system.
This system uses two simple moving averages, but they are calculated in
a slightly different manner than those traditionally used. The first
moving average is a moving average of the daily highs, as opposed to
that of the daily settlement like most traditional moving averages. The
second moving average is calculated using the daily lows.
Though Mr. Bernstein recommends using a 10 period moving average of the
daily highs and an 8 period moving average of the daily, based on his
observation that prices tend to fall about 20% faster than they rise,
any combination would do the trick. Generally though, accepting market
lore that prices fall faster than they rise, the moving average of the
lows should be of shorter term duration than that of the highs.
Interpretation
The most basic use of the 10x8 Moving Average is to look for a breakout
above the upper moving average to initiate a buy signal. When the daily
settlement price exceeds the average high of the last 10 days, this
indicator flashes a buy signal indicating that the trend of the market
should be up.
Example of 10x8 MAC in Track 'n Trade Pro:
Customizing
To change the settings of this indicator, open the Program Options
screen by clicking the "Program Options" button located on the main
Toolbar.
See the Program Options section for more details on changing the
settings of each indicator.
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