Granville’s New Key is a technical analysis indicator that was developed by Joseph Granville, a renowned technical analyst. The New Key is a momentum indicator that is used to identify trend reversals in a financial market. It is calculated by subtracting the 15-day moving average of the daily up volume from the 15-day moving average of the daily down volume.
The New Key indicator is based on the principle that the volume of trading is a key factor in determining the direction of a trend. When the volume of trading is high, it is an indication that the market is becoming more active and traders are becoming more interested in buying or selling an asset. Conversely, when trading volume is low, it is an indication that the market is becoming less active and traders are becoming less interested in buying or selling an asset.
The New Key is calculated using the following formula:
New Key = (15-day moving average of up volume) – (15-day moving average of down volume)
The up volume is the volume of shares traded on days when the closing price is higher than the previous day’s closing price. The down volume is the volume of shares traded on days when the closing price is lower than the previous day’s closing price. The 15-day moving average is the average of the up or down volume over the past 15 trading days.
When the New Key is positive, it is an indication that the buying pressure is increasing, and the market is likely to trend higher. Conversely, when the New Key is negative, it is an indication that the selling pressure is increasing, and the market is likely to trend lower.
Traders use the New Key to identify potential trend reversals in the market. When the New Key changes direction, it is a signal that the market may be changing direction as well. Traders may use this signal to enter or exit trades, or to adjust their trading strategy to take advantage of the changing market conditions.
In summary, Granville’s New Key is a momentum indicator based on trading volume that is used to identify potential trend reversals in the financial markets. It can be used by traders to adjust their trading strategy based on changing market conditions.
