This is a trend momentum indicator that uses some of Ichimoku Cloud's core trading concepts and Supertrend, so before using this indicator, you can first understand Ichimoku Cloud, which is very helpful for understanding this indicator.
There are mainly the following ways to identify trends in Ichimoku Cloud.
1. The price is above or below the Tenkan-sen and the Kijun-sen 2. The Tenkan-sen crosses the Kijun-sen 3. The price breaks or falls below Leading Span B 4. Leading Span A crosses Leading Span B
I converted the above signal into the following expression (see chart):
1. Green dot: the price is above the Tenkan-sen and Kijun-sen 2. Red dot: the price is below Tenkan-sen and the Kijun-sen 3. Orange or blue dot: the price is between Tenkan-sen and Kijun-sen 4. Triangular symbol: the Tenkan-sen crosses the Kijun-sen, and the price continues to stand firmly above or below Kijun-sen by 2 candles (prevent fake moves) 5.B1 signal: the price breaks or falls below Leading Span B 6. B2 signal: Leading Span A crosses Leading Span B (this expresses whether the color of the cloud is green or red in Ichimoku cloud)
The default for this indicator is Ichimoku Cloud turned off so that the charts are simpler, but you can turn it on if you want to check Ichimoku Cloud.
When you use this indicator, you can observe the changes of the dots:
1. The upward trend reverses to a downward trend (see chart)
What you will see is: green dots, orange dots, red dots, unless the price suddenly falls below the Tenkan-sen and the Kijun-sen, then you will see red dots directly without orange dots .
2. The downward trend reverses to an upward trend (see chart)
What you will see is: red dots, blue dots, green dots, unless the price suddenly breaks through the Tenkan-sen and Kijun-sen, then you will see the green dots directly without the blue dots.
The dot is usually the signal on the left-hand side, the triangle is between the left-hand side and the right-hand side, and B1/B2 is the signal on the right-hand side. I recommend entry trades separately , and using Supertrend to judge the trend. This is why this indicator also adds two Supertrends.
Why not just use the Super Trend indicator?
Because SuperTrend only provides a pure uptrend or downtrend, it does not show the upcoming reversal. And with the momentum dots added, when you see orange or blue dots, the trend may be about to reverse. Therefore, this indicator can better capture the changing process of the trend.
What if the momentum dots are not trending as indicated by the SuperTrend indicator?
If the Super Trend shows a downward trend, but you frequently see green and blue dots, it means that the trend is likely to reverse upwards. On the contrary, if the Super Trend shows an upward trend, but you frequently see red or orange dots, it means that it is likely to reverse downward.
Please remember that when you want to open a position, the trend direction of SuperTrend should be consistent with the direction of the dots momentum and signals. If they are inconsistent, you need more patience to judge the trend direction.
Which signal is most important?
When using these signals, you must remember that the dot belongs to the left-hand side signal, the triangle belongs to the half left-hand side and half right-hand side signal, and B1/B2 is the right-hand side signal. So I think the B1/B2 signal is the most important because of the meaning of B1 It means that the price has broken through the support or resistance of the cloud layer, and the meaning of B2 in Ichimoku Cloud is that the cloud (kumo) has reversed.
I backtested COINBASE:BTCUSDT for several signals of this indicator, and the B2 signal has a higher win rate.
Why two SuperTrends are used?
Because I found that there are many fake moves in the market, using two SuperTrends with different ATR multipliers can effectively identify fake moves.
Most Important Reminder:
The dot display, triangle signal, and B1/B2 signals have a sequential relationship with the timing of their appearance. During the process of trend change, you will definitely see the change of the dot first, then the triangle, and finally B1/B2, this is why I suggest that you should add positions separately. If the signals on the chart are not displayed in sequence, it means that the trend has not reversed. Then adding positions separately at the beginning can just reduce your loss.
In addition, it is strongly recommended that you must understand the formula of Ichimoku Cloud, otherwise you may misuse this indicator.
How do I use this indicator?
1. I will build positions in batches when I see the triangle, B1, and B2 signals. 2. When you see Supertrend changing trend, or reverse triangle, you can consider ending position. 3. Triangle/B1/B2 and other signals should be in the same direction as Supertrend before entering the market. 4. When you see the green dot, you don’t need to rush to get into the market, you can wait for a triangle signal, because the triangle means that the conversion line (Tenkan-sen) crosses the base line (Kijun-sen), and the price stands firm on the base line (Kijun-sen) two candles above or below 5. If you are not sure why there is a triangle/B1/B2 signal in a certain place, you can open Ichimoku Cloud in settings to confirm for yourself.
1.價格在轉換線(Tenkan-sen)與 基準線(Kijun-sen)上方或下方 2.轉換線(Tenkan-sen)與 基準線(Kijun-sen)交叉 3.價格突破或跌破 Leading Span B 4. Leading Span A 與 Leading Span B 交叉
我將上述訊號轉換成以下表達方式(看圖):
1.綠點:價格在轉換線(Tenkan-sen)與 基準線(Kijun-sen)之上 2.紅點:價格在轉換線(Tenkan-sen)與 基準線(Kijun-sen)之下 3.橘點或藍點:價格在轉換線(Tenkan-sen)與 基準線(Kijun-sen)之間 4.三角形符號:轉換線(Tenkan-sen)與 基準線(Kijun-sen)交叉,並且價格持續站穩 Kijun-sen 兩根K線(防止假突破) 5.B1 訊號:價格突破或跌破 Leading Span B 6.B2 訊號:Leading Span A 與 Leading Span B 交叉(這表達為雲的顏色是綠色還是紅色)
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