Shinohara Intensity Ratio (SIR) - the indicator
This indicator is used to show the intensity of the trend. It shows the possible direction of the price. If the price is in an uptrend or a downtrend, the indicator tells you when to buy, sell or get out. A good example of this is the chart of natural gas, where a reversal in trend was seen a few days earlier. The Shinohara indicator indicated this a few days earlier.
SIR preset
Period: last 26 periods
Strong ratio: green line "GL
Weak ratio: red line "RL
What does the SIR indicator show?
It has two lines. The strong ratio line is green and the weak ratio line is red.
When the "GL" is above the "RL", this indicates that the price is in an upward trend. When the RL is above the GL, it indicates that the price is in a downward trend.
The increase of the ratio is the sign that the intensity of the trend is increasing. The high value of the SIR indicator indicates that a trend reversal may be imminent.
SIR indicator line is around 100, this indicates the intensity of the price is average.
SIR line is above 120, the intensity of the beginning of a strong trend
SIR line is above 200 or more, this indicates the extreme intensity of the trend
Using the strategy
Buy signal: The "GL" rises above the 120 level and the "RL" is below the 100 level.
Sell signal: The "RL" rises above the 120 level and the "GL" is below the 100 level.
When the "GL" & "RL" (both lines) rise above 120 or more, you should avoid taking any position.
You can take profit or close your position when the indicator line moves above the 200 level, then you should alert. If the price trend starts to reverse, then you can close your position.