TRN Bars

22 Apr

The innovative TRN Bars are designed to help traders to analyze markets in an intuitive way. It combines three core concepts:

• TRN Bars to see the current trend and reversals (replaces the default chart bars)
  
• Bar Ranges to highlight consolidations
  
• Dynamic Trend to see the overall trend.
  

First, let's have a look at each of these concepts individually. Afterwards, we describe how a combination of all three gives you a crystal-clear picture of the market.

TRN Bars

They show bullish and bearish trends and reversals based on color coding the bars and give high probability trade opportunities with special colors. The trend analysis is based on a new algorithm that includes several different inputs:

• classical and advanced bar patterns and their statistical frequency
  
• probability distributions of price expansions after certain bar patterns
  
• bar information such as wick length in %, overlapping of the previous bar in % and many more
  
• historical trend and consolidation analysis
  

The algorithm weighs these concepts and outputs a color scheme for the chart bars or candlesticks.

Bar Types

• Trend bars in green and red
  
• Reversal Bars in blue and fuchsia
  
• Continuation Bars in turquoise and orange
  
• Breakout Bars in dark green and pink
  

Green Bars signify a sustained uptrend, indicating bullish market sentiment. On the other hand, Red Bars indicate a persistent downtrend, representing bearish market sentiment. The transition from red to green denotes a bullish trend reversal, suggesting a shift from bearish to bullish sentiment. Conversely, the shift from green to red signals a bearish trend reversal, indicating a transition from bullish to bearish sentiment. By monitoring these color changes, traders can identify potential trend reversals and make informed trading decisions.

The presence of gray and black bars indicates a neutral market state, often observed before an impending color change from red to green or green to red. These neutral bars serve as a transition phase between the previous trend and the potential reversal.

The TRN Bars incorporate Signal Bars, distinguished by their distinct colors, to offer potential buy and sell signals and deeper insights into market dynamics.

1. Reversal Bars
   
   The presence of blue Reversal Bars indicates a trend reversal to the upside, while pink Reversal Bars indicate a reversal to the downside. These bars not only serve as signals for potential trend shifts but also present favorable opportunities to enter the market or increase one's position size.
   
   
2. Continuation Bars
   
   In addition to the reversal bars, TRN Bars also include bullish continuation bars (colored turquoise) and bearish continuation bars (colored orange). These bars act as signals for the continuation of an existing trend. Like the reversal bars, they can be utilized as entry points or opportunities to augment one's position size.
   
   
3. Breakout Bars
   
   The dark green breakout bars within TRN Bars show a powerful breakout from a price range detected by our integrated bar range feature. They signify the continuation or potential change in a trend following a consolidation phase. As such, these bars hold dual functionality, serving as reversal signals and validating the persistence of an ongoing trend.
   

Bar Ranges

The bar range feature automatically finds consolidations where the price range of several consecutives bars is rather small. The detection of the bar ranges includes among other things the overlapping percentage of these bars.

How to Use Price Ranges

Here are a few ways you can use the bar ranges in your trading:

1. Identify Support and Resistance Levels
   
   The price ranges can help you identify key support and resistance levels on a chart. By observing price ranges and identifying these levels, you can make more informed decisions about entering or exiting trades.
   
   
2. Breakout Trading
   
   Price ranges can also provide insights into potential breakout opportunities. Breakouts occur when the price breaks out of a defined range, signaling a potential shift in market sentiment and the start of a new trend. The Color highlighted Breakout Bars from the TRN Bars are signaling a powerful breakout of a price range. Traders can enter positions in the direction of the breakout and set appropriate stop-loss orders to manage risk. Note that not every price range is left by a powerful breakout.
   
   

Dynamic Trend

The Dynamic Trend combines elements from standard trend strength indicators (e.g. DI-, DI+, Parabolic SAR) and volatility indicators (e.g. ATR, Standard Deviation). It produces a moving average line that adapts to changing market volatility. It is inspired by the ideas of the programmer and trader Fat Tails. The adaptive behavior provides more relevant information for traders when compared to traditional moving averages which do not consider volatility and trend strength together. This makes the Dynamic Trend completely unique, and no other moving average indicator can give you this precision.

How to use Dynamic Trend



Generally, a rising Dynamic Trend line, displayed in green, indicates that an uptrend is strong, while a falling Dynamic Trend, displayed in red, suggests that the downtrend is sharp. The Dynamic Trend turns gray when there is insufficient clarity to establish a distinct trend and especially when there is not volatility in the market.

Identify potential trade entries and exits: When used in conjunction with price action, the Dynamic Trend can provide potential trade signals. For example, if the price crosses above the Dynamic Trend, it may be a bullish sign, suggesting a potential buy entry. Conversely, if the price crosses below the Dynamic Trend, it may indicate bearish conditions and a potential sell signal.

1. Trend Identification and Pullback trading
   
   Observe the Dynamic Trend's color. When it's on the rise and appears green, it indicates a bullish trend. Conversely, if it's in decline and displayed in red, it signals a bearish trend.
   
   If Dynamic Trend is green and price pulls from above back to the Dynamic Trend, then this can be considered as a bullish signal.
   
   If Dynamic Trend is red and price pulls from below back to the Dynamic Trend, then this can be considered as a bearish signal.
   
   In the event of a bearish signal, such as a bearish TRN Signal Bar, and the Dynamic Trend is red, it provides additional confirmation to the bearish signal. Likewise, bullish signals gain added conviction when the Dynamic Trend is green.
   
   
2. Crossovers
   
   
   
   As with other moving averages, crossovers between the Dynamic Trend and the price can be significant.
   
   If price is crossing above the Dynamic Trend, then this can be considered as a bullish signal.
   
   If price is crossing below the Dynamic Trend, then this can be considered as a bearish signal.
   
   If you currently hold a position, both bullish and bearish crossovers can serve as potential exit signals. For instance, in the case of a long position, a bearish crossover can indicate a potential shift in sentiment, signaling a bearish reversal and a potential opportunity to close your long position.
   
   
3. Filtering Noise
   
   Due to its adaptive nature, the Dynamic Trend can be a useful tool to filter out market noise. When the market is choppy or consolidating, the Dynamic Trend tends to remain flat and colored gray, signaling traders to potentially stay out of the market.
   
   
4. Stop Losses
   
   The Dynamic Trend can also be used as a dynamic stop loss. For instance, in a long trade, traders can use the Dynamic Trend as a trailing stop, selling their position if the price crosses below the Dynamic Trend.
   

Combining TRN Bars, Bar Ranges and Dynamic Trend together

Combining all three concepts gives you a crystal-clear picture of the market. The Dynamic Trend shows you the overall trend. If price pulls back to the dynamic trend line and then price picks up the trend direction again, then the TRN Bars immediately switch the color to the trend direction. Therefore, you can easily identify high probability entry signals based on the bar color.

As a simple trading model, you can set the stop loss below the last swing or below a TRN signal bar (vice versa for short entries) and use 2.5 R or 3 R as target.



You can increase the success rate of the high probability TRN signal bars entries even more if they are in line with the Dynamic Trend line.



On the other hand, the TRN Bar Ranges help you to stay out of the market in case the price does not really change. As a confluence signal to stay flat in this period the dynamic trend line tends to be grey as well. If the price breaks out of the range, then the TRN Bars print a breakout bar which serves as a high probability entry signal.



Although it is possible to switch off any of these concepts, it is highly recommended to use all three in combination to get a crystal-clear picture of the market.

Alerts

Experience the power of our TRN Bars Alerts, delivering real-time notifications for trend changes, price range breakouts, and signal bar formations or confirmations. Stay on top of the market with these versatile alerts, customizable to your preferred assets and timeframes.

Conclusion

While signals from TRN Bars can be informative, it is important to recognize that their reliability may vary. Various external factors can impact market prices, and it is essential to consider your risk tolerance and investment goals when executing trades.