This indicator helps to determine at what stage the market is.
What is included in this indicator:
1. Trend Line - orande
2. ROP line - green and red
3. RSI Line - violet
What is the principle of the indicator?
1. Trend Line - orande
The principle of operation of this line is that at the entrance, data (closing and opening) / 2.
Further, with this data, the transformation is carried out. Then the data is fed into the RSI function.
2. ROP line - green and red
This is an auxiliary indicator based on a combined technical indicator of smoothed and weighted rates of price change from the book Martin Pring on Market Momentum
3. RSI Line - violet
Relative strength index is a technical analysis indicator that determines the strength of a trend and the likelihood of its change.
How does this indicator help in trading?
Trend Line - a trend line, orange on the chart.
This is an oscillator - showing the direction of the trend, as well as the phase in which the trend is.
The Trend Line ranges from 0 to 100. Control lines are drawn through 5 from the bottom of the Low Line, and 95 from the top (Upper Line).
Bullish trend
A bullish trend starts from the upward intersection of the Trend Line and the Low Line (5) and lasts until the intersection of the Trend Line and the Upper Line (95) from top to bottom.
In a phase when the trend is bullish and the Trend Line is above the Upper Line, a bull run may start. It is necessary to wait for the culmination of purchases.
What information and benefits we get from the indicator:
1. Knowing in what phase the market, ie. in the growth phase. You understand that you need to trade up. And don't go against the trend.
2. Seeing that the indicator is above line 95 (Upper Line), you understand that a bull run can happen, and you should also wait for the culmination of price growth and close long positions.
Bearish trend
The bearish trend starts from the top down intersection of the Trend Line and the Upper Line (95) and lasts until the upward intersection of the Trend Line and the Low Line (5).
In the phase when the trend is bearish and the Trend Line is below the Low Line, a panic sale may start. It is necessary to wait for the culmination of sales.
What information and benefits we get from the indicator:
1. Knowing in what phase the market, ie. in the fall phase. You understand that you need to trade down. And don't go against the trend.
2. Seeing that the indicator is below line 5 (Low Line), you understand that a panic sale can happen, and you should also wait for the culmination of the price fall and close the short position.
ROP line - Rate of price change
This is the price rate line. It helps to find the culmination point and reversal, as well as to understand the price direction.
This indicator consists of two lines:
- Green line - main;
- The red line is the signal line.
There is also a Zero Line.
Usage logic
Direction of movement and position of the relative Zero line
Bullish trend
If the indicator lines are above the Zero Line, as well as the green line above the red, this means an upward movement. The trend is bullish.
If the indicator lines are above the Zero Line, and the green line is below the red one, it means that the price has reversed and is in the phase of correction or reversal.
Bearish trend
If the indicator lines are below the Zero Line and the green line is below the red one, it means that the price is going down. The trend is bearish.
If the indicator lines are below the Zero Line, as well as the green line above the red, then the price has reversed and is either in a correction or reversal phase.
Climax points
Climax points are pivot points. A reversal occurs when the green and red lines cross.
When the green line crosses the red one upwards, the trend will go up.
When the green line crosses the red one downwards, the trend will go down.
The culmination of purchases and a reversal should be expected provided that the indicator lines are above the Zero Line, and the green line crosses the red one from top to bottom.
The climax of selling and a reversal must be expected provided that the indicator lines are below the Zero Line, and the green line crosses the red one from top to bottom.
3. RSI Line
The RSI line is needed as an auxiliary tool.
If you missed the entry point, then you need to enter the position on the pullback of the RSI line. In the same direction as that of the Trend Line.
Use the link below to obtain For more info and screenshots please visit Website Tab Trand Indicator.
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