The Trend Change Indicator is an all-in-one, user-friendly trend-following tool designed to identify bullish and bearish trends in asset prices. It features adjustable input values and a built-in alert system that promptly notifies investors of potential shifts in both short-term and long-term price trends. This alert system is crucial for helping less active investors correctly position themselves ahead of major trend shifts and assists in risk management after a trend is established. It's important to note that this indicator is most effective with assets that historically exhibit strong trends.
At the heart of this tool is the interaction between the 30-day and 60-day Exponential Moving Averages (EMA). A bullish trend is indicated in green when the 30-day EMA is above the 60-day EMA, while a bearish trend is signaled in red when the 30-day EMA is below the 60-day EMA. The appearance of gray alerts users to potential shifts in the current trend as the EMAs converge, falling below the Average True Range (ATR) safety margin. This analysis is conducted across both hourly and daily timeframes, with the 4-hour timeframe providing early signals for daily trend changes. The band visually represents the interaction between the daily EMAs and is also displayed in the second row of the table, with the first row showing the same EMA interaction on the 4-hour timeframe.
This indicator also includes a 140-day (20-week) Simple Moving Average (SMA), visually represented by a line with predictive dots. This feature significantly enhances the investor's ability to understand long-term trends in asset prices, offering forward-looking insights by projecting the SMA value 10 days into the future. The value of this forecast lies in interpreting the slope of the dots; upward trending dots suggest a bullish underlying trend, while downward trending dots indicate a bearish trend. Generally, prices above the SMA signal bullishness, and prices below indicate bearishness.
In summary, the Trend Change Indicator is a comprehensive solution for identifying price trends and managing risk. Its intuitive, color-coded design makes it an indispensable tool for traders and investors who aim to be well-positioned ahead of trend shifts and manage risk once a trend has been established. While it has proven historically valuable in trending markets such as cryptocurrencies, tech stocks, and commodities, it is advisable to use this indicator in conjunction with other technical analysis tools for a more comprehensive and well-rounded decision-making process.
Hi, can you help clarify this, does the first and second row bearish/bullish table represent 4H and Daily TF? If yes, let say you have 4H Bearish and Daily Bullish, the Daily would take precedence over the 4H correct?
ingeforberg
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@Vincesnp24, Hello! Thank you for reaching out. I'm glad to provide further clarification. Indeed, the first row in the table represents the 4-hour timeframe, and the second row represents the daily timeframe, which is also visually plotted on the chart. The logic is such that the 4H TF often provides an early warning ahead of the 1D TF. Ideally, you always want to be long when both 4H and 1D indicators signal bullish trends and the predictive dots of the white line are trending upwards. If the 4H timeframe indicates a bearish trend while the 1D timeframe is bullish, it could be prudent to secure some profits. Conversely, if both timeframes show bearish trends and the predictive dots of the white line are trending downwards, it is advisable not to hold a long position. To answer your question: The daily timeframe holds greater significance; however, the 4H timeframe can be valuable for timing your market entries and exits more effectively, especially when the daily timeframe is warning about a potential trend change, indicated by the color gray. Please let me know if you need further clarification😊
Vincesnp24
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@ingeforberg, Beautiful...thank you so much for the clarification.