๐ก In which direction the market is moving.
» Dots are placed on the chart above or below the price.
๐ก Indicate the potential direction of the price movement.
» Dots above the price = ๐ downtrend
» Dots below the price = ๐ uptrend
โ ๏ธ Do not use Parabolic SAR in a ranging market (price is moving sideways). Lot of noise. Dots flip from side-to-side = no clear signal.
๐ก Measures future price momentum
๐ก Determines areas of future support and resistance
Settings:
The Senkou span = dynamic support and resistance levels.
» Price above Senkou span = top line acts as first support and the bottom line as second support.
» Price below Senkou span = bottom line acts as the first resistance and the top line as the second resistance.
Kijun Sen (blue line) = confirm trends.
» Price breakouts above the line = likely rise further.
» Price drops below the line = likely go lower.
Tenkan Sen (red line) = confirm trends
» Line moving up or down = market is trending.
» Line moving sideways = market is ranging.
Chikou span (green line) = trend indicator. (Plotted 26 periods BEHIND the current period.)
» Line crosses the price in a bottom-up direction = the price is likely to go up.
» Line crosses the price in a top-down direction = the price is likely to go down.
โ ๏ธ If you get your Kijun Sen (blue line) and your Chikou Span (green line) mixed up, then you could mistake a downtrend for an uptrend!
1)
» The price closed below the Kijun Sen (blue line) = price might go lower.
2)
» Price below the Kijun Sen = bearish
» Parabolic SAR is still below the candlestick = bullish
» Conflict between the 2 indicators = do nothing
3)
» Price under the Kijun Sen = bearish
» Parabolic SAR has flipped sides (!)
» Both indicators are showing bearish signals = ๐ go short!
» Moving averages of other moving averages
» Consists of a fast line, slow line, and a histogram
Config: MACD "12, 26, 9"
"Convergence divergence" = the lines crossover.
» As the difference between the 2 lines gets smaller, they get closer together, i.e. converge.
» When the difference gets bigger, they get further apart, i.e. diverge.
When a new trend is forming, the MACD lines will converge, eventually theyโll crossover (indicating that the trend has reversed), and the lines then start to diverge.
At the point of crossover, the histogram will disappear because the difference between the lines is 0.
๐ Fast line (blue) crossed over the slow line (orange) = indicates that the previous downtrend has ended and an uptrend is starting.
โ ๏ธ MACD lags behind price quite a lot = not the best indicator to get into trends early. Good for confirming trends.