When the 2 moving averages are wrapped around each other, you have a trading range. Also consider how far price pulls away from the 20 period average.

The further price gets from an average price, the more risk there is of a mean reversion pullback in price. You can choose to keep it very simple: is the moving average heading, generally, in one direction over another? I have written about the MACD in the past and I think it is something to consider especially if you use it on a higher time frame.

In our example, we will use the default setting of 12, 26, 9 and will remove the histogram. I will also use the daily chart for setups but the weekly chart of trend direction. Once the MACD crosses to the upside the green circle on the weekly, the trend indicator is showing the current trend as long and we are looking for buy signals on the daily chart.

You will see the downside cross on the daily chart fast line down through the slow line where we see a pullback. We look to get long according to our trading strategy. On the daily chart, we can use the MACD to show consolidation as the lines of the indicator get tight. That said, as long as we are seeing the separation of the lines of the MACD on the weekly, we consider we are seeing a strong trending market to the upside.

The DMI is not only a decent trend indicator but with the addition of the ADX , we can also see the strength of the current trend. I picked a daily stock chart for this example that also takes into account an ascending triangle chart pattern.

How do you read this trend indicator? If you waited for the ADX trend strength indicator to pass 20, you find yourself looking for entries at highs. Understanding price patterns along with reading the DMI and rising ADX, gets you positioned long on a break of the triangle.

You can see on the left that the DMI lines are crisscrossing while the ADX is below One look at price shows that the indicator is telling you we are in a trading range. Whatever method you use, ensure it is part of an overall trading strategy that includes risk management. Yes, all are good indicators. The more different timeframes that support one direction the better.

Comment for Coach Shane. My trading platform is Think or Swim by TD Ameritrade. Is there any any way to implement putting outside smoothed Hiken Ashi data into Think or Swim? I think TOS may be proprietary. Thanks , Rick. This site uses Akismet to reduce spam. Learn how your comment data is processed. August 19, Posted by: CoachShane Category: Trading Article 3 Comments. Why Should You Use Trend Trading Traders looking for bigger returns know that the path of least resistance is in the direction of the big money.

Is there a benefit to grabbing a trend reversal? Can you pick tops and bottoms consistently? I will gladly take less stress over the constant stop outs of trying to pick the turning point. Can you see on the left the consolidated breakout with momentum to the upside? Middle of the chart, with the yellow lines, shows a consolidation and breakdown.

The left side of the chart again shows a consolidation with a breakout to the upside. With a quick glance at the chart, what does your gut say price is doing? Use A Line Chart A line removes the candles or bars and just plots the closing price of the instrument. I find the swings are much easier to see due to the points made when price changes direction. Trend Lines I want to include trend lines along with price action.

The last trend line is just connecting lows. You also must decide what a change in trend looks like: Will you use the slope of the moving average?

Does price have to simply close above or below to change your trend? Do you need several of the averages to line up? We have multiple trend directions using the moving averages on this chart. The choice for you is how active do you want to be? Can you live with missing a large part of a move when using a longer term average?

Can you handle being whipsawed as the shorter average alternates between buys and sells? How To Identify Trend Strength With Moving Averages Using 2 averages, such as the 20 and 50 period, can help you gauge the strength of the trend , When the 20 pulls away from the 50, price is advancing at a steady rate and you can consider that to be a strong trend. Moving Average Convergence Divergence MACD I have written about the MACD in the past and I think it is something to consider especially if you use it on a higher time frame.

Directional Movement Indicator — DMI The DMI is not only a decent trend indicator but with the addition of the ADX , we can also see the strength of the current trend. The final trend indicator that will actually work for you is Channels. A Channel is a special variation of a standard Trendline that runs parallel to the trendline and helps you properly identify the potential for opposing pressure on a trend. The Channel can help you get profit ahead of time before a higher probability of reversal occurs.

Channels are plotted similarly to trendlines, except they need to be run parallel to allow you to view both the trendline data trend and the Channel data trend at the same time. Thankfully, online software makes it easier than ever to have Channels plotted on the same chart as trendlines, so you will be able to easily tell the difference between these two vital pieces of information.

You need to take advantage of one of the most overlooked yet precious trend indicator techniques available: looking at the big picture. If you focus on the trees, you miss the forest—if you focus on the water, you miss the ocean.

This same principle applies to trends. If you are only looking at the current prices, then you will miss the long-term trends. In other words: zoom out your trend charts to see a broader view of the current trends.

You will be able to more easily identify trends when you can see where they started versus where they are now. Long-term trends are just as valuable as short-term trends; in fact, long-term trends are an essential component for identifying short-term trends.

Remember: the above trendlines are not crystal balls, nor will they give you all the answers. However, they will provide you with a much better chance of understanding how to identify trends and make more informed financial choices based on that identification.

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Join Our Telegram Group Chat - CLICK HERE. This forex trend indicator is a non-repaint trading system based on the most advanced, adaptive, and profitable trading turning-point detection algorithms on the market, powering ATR, RSX, and MACD, Bollinger Bands, and Moving Average strategies. This Best Forex Trend Indicator system can give you trading signals you can take as they are or add your additional chart analysis to filter the signals further, which is recommended.

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You can also use it on any time frame that suits you best, from the 1 minutes through to the 1-month charts. Save my name, email, and website in this browser for the next time I comment. Attachment The maximum upload file size: 5 MB. You can upload: image , audio , video , document , spreadsheet , interactive , text , archive , other. Links to YouTube, Facebook, Twitter and other services inserted in the comment text will be automatically embedded. Drop file here. Notify me of follow-up comments by email.

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Hope it helps. I was able to add another grey line on the left as a support level of a trading range was more obvious. Don't Miss Huawei launches HMS Core 6. Moving average refers to summarizing past prices, which are then plotted onto a line chart to give you an idea of the moving average of those prices. Strong Trend: 50 Degrees to 80 Degrees Trend-Line Angle Healthy Trend: 30 Degrees to 49 Degrees Trend-Line Angle Weak Trend: 10 Degrees to 29 Degrees Trend-Line Angle. Medium term direction — 50 period average.

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