Inertia Technical Analysis & Inertia MT5 Indicator

Developed by Donald Dorsey & was originally used to trade Stocks & Commodities market, before forex traders took it and started forex trading the forex market using this MT5 forex trading technical indicator.

Dorsey chose to name it "Inertia" because of his interpretation of the market trend. He claimed that a forex market forex trend is the overall result of inertia and thus it takes more momentum for a trending market to reverse its direction than to continue moving in the same direction. Therefore, a Forex trend is the measurement of market inertia. This is an oscillator MT5 indicator MT5 indicator that uses the scale of zero to a hundred. Signals are generated using the 50 level center line crossover method.

In physics, the term Inertia is defined in terms of mass and direction of motion. Using the standard technical analysis, the direction of motion of the forex trend can be easily defined. However, the mass can't be easily defined. Dorsey claimed that the volatility of a financial instrument might be the simplest and the most accurate measurement of inertia. This theory led to the use of the Relative Volatility Index (RVI) as the basis to be used as a forex trend technical indicator. Therefore Inertia indicator is comprised of: RVI smoothed by a linear regression.

FX Technical Analysis & How to Generate Signals

When it comes to forex trading the currency market using this MT5 indicator, the signals generated are fairly simple to interpret. Below are two examples illustrated using currency forex charts showing how buy and sell signals are generated using Inertia.

Upward Forex Trend - Bullish Buy Signal

If the Inertia is above 50, positive inertia is indicated, this therefore defines the long-term Forex trend as upward as long as the indicator remains above 50. When it crosses to levels below 50 then this is interpreted as an exit signal. The chart below shows an example of how a buy signal is generated.

Upwards Forex Trend - Bullish Signal

Downwards Forex Trend - Bearish Sell Signal

If the Inertia is below 50, negative inertia is indicated, this therefore defines the long-term forex trend as downwards as long as the indicator remains below 50. If it goes above 50 then this is interpreted as an exit signal. The currency chart below shows how a sell signal generated.

Downwards Forex Trend - Bearish Signal