Forex Indicator Supertrend is an easy to use forex trading system which makes it one of the best available to date. It uses a simple trend line as an indicator of future prices so that traders can identify which currencies to trade, and when to sell.
Supertrend is a forex indicator which is based on a mathematical algorithm and predicts the direction of price movement in the forex market. It is an advanced trend indicator and has been used in conjunction with an oscillator to generate forex swing trading system.
You can compare different trading systems and timeframes for a long time, but the effectiveness of almost all known methods will directly depend on the qualitative identification of the prevailing trend. Since the successful solution of this very issue guarantees the survival of the speculator in the medium term, today we will consider a thematic super trend indicator that works without redrawing.
Forex Indicator Supertrend – How It Works
Looking at the chart, you can see that the indicator has four different states: the red color of the curve line (horizontal and downward sloping lines) and the green color of the curve (downward sloping and horizontal sections). The former indicate a downtrend and the latter an uptrend. They are calculated based on the CCI values. When CCI <0, the following formula is applied: SuperTrend = HIGH + ATR When CCI> 0, then the following dependence is obtained: SuperTrend = LOW – ATR
As mentioned above, the indicator is colored in two colors for ease of perception: green and red. Accordingly, the green line of the indicator signals the opening of buy deals, and the red one about the possibility of entering a short position. It is recommended to enter trades on the indicator when its line color changes to the opposite one. For greater reliability and processing of signals, you need to work with this indicator on higher timeframes – from M30 and higher. Practice and statistics show that it is optimal to use the Supertrend indicator on the D1 timeframe.
Supertrend Indicator Helps To Detect Forex Trends
There are very few signal options for this indicator. Here are some of them:
Alternating line colors. This happens because the trend changes direction, but sometimes false signals occur when the price changes direction for a short time and then continues to go in the same direction again.
The horizontal sections of the indicator lines tell us that there is a consolidation near a certain level. In this case, to determine strong levels, it is better to use higher timeframes on the SuperTrend indicator, since stronger levels can be determined on them. The longer the horizontal section, the more significant this level is.
With this tool, it is very easy to identify a trend. When the indicator curve is colored green and directed upwards, the trend is bullish, and when the color changes to red or the line becomes horizontal, a change or weakening of the trend should be expected.
Trading Gold With Supertrend Forex Indicator
It can be assumed that using the SuperTrend indicator, one can easily find points for entering the market. You can also determine the direction and strength of the trend. It is great for identifying support / resistance zones thanks to its multi-timeframe version.
Its advantage is its simplicity and reliability, its algorithm is simple and, if you wish, you can more flexibly customize it for yourself. Using this indicator, you can significantly reduce the technical analysis time, which will have a positive effect on your trading.
By changing the color and shape of the lines, you can easily determine the current trend. For example, if the sloping red line is replaced by a horizontal line, then this indicates that after a downtrend, the market moved to flat. A trend reversal should be expected in the near future.
This method is effective for multi-timeframe trading. It allows you to filter out false signals and increase the number of profitable trades. You need to add the current TF indicator and the older TF indicator to the working chart. For example, if you are trading on an hourly interval, then configure MTF SuperTrend so that it simultaneously shows price movement on two timeframes – H1 and H4. Then two colored lines will appear on the chart, one of which is built for the working TF, and the second for the older chart.
Like any other indicator, MTF SuperTrend alone cannot form the basis for a complete trading strategy. Although its signals are reliable, they still require additional filtering, especially on lower timeframes, where market noise is present. The main advantage of the tool is that it works without redrawing and shows the trend direction at the same time on the lower and higher charts. However, to build a stable trading methodology, use it in combination with other trend indicators.