Developed by M. H. Pee, the Trend Continuation Factor aims to help traders identify whether the market is trending, and, in case it is, in what direction it is headed. It can be used in any time frame, with every currency pair and is suitable for beginner traders.
Function
The indicator is comprised of two lines, namely the PlusTCF and MinusTCF, which separately correspond to bullish and bearish momentum, respectively. If the PlusTCF line is positive, then the prevailing trend is bullish, while a positive MinusTCF line signifies a bearish trend. Logically, both lines cannot be positive at the same time because the market cannot be in a bullish and a bearish trend simultaneously. However, they both can be negative at a current moment, implying that the market has consolidated in a trading range.
As for trading this indicator, it is generally interpreted and acted upon in a similar way as trading the Average Directional Movement Index. The most basic trading strategy involving the TCF is to enter long positions when the PlusTCF line is positive and to enter short positions when the MinusTCF is positive.
Traders also tend to regard the crossovers of the PlusTCF and MinusTCF lines as entry signals in the direction of the advancing line. Thus, if the PlusTCF crosses the MinusTCF and becomes positive, you should initiate a long entry, and vice versa.
Key Signal
PlusTCF Line --> bullish momentum line in yellow; MinusTCF Line --> bearish momentum line in fuchsia.