Rainbow Charts Bitcoin Trading Analysis & Rainbow Charts Trade Signals

Developed by Mel Widner

This is a bitcoin trend following indicator, similar to the moving averages - it is drawn using a 2 period simple moving average. The Moving average MA is then smoothed out to create a total of ten MAs moving averages. First moving average MA is the basis, then the next moving average MA is calculated using the first one, the third is then calculated using the second one and so on. This forms a rainbow shape of the bitcoin crypto trend, each moving average is applied with a different colours so as to look as a rainbow.

Rainbow Charts Technical Bitcoin Indicator - Rainbow Charts Indicators

BTCUSD CryptoCurrency Analysis and Generating Signals

Bullish Bitcoin Trading Trend/ Upward BTCUSD Trend

When the bitcoin trend in the btcusd market is Upward/bullish trend, then the rainbow will be moving upward, the least smoothed line will be at the top of the trading indicator, this is the red-line and the major smoothed line - Violet will be at the bottom of the trading indicator, this is the violet line.

Bearish Market/Downwards Bitcoin Trend

When the prevailing bitcoin trend is downward (bearish), the rainbow charts will descend, positioning the major smoothed line (Violet) at the lowest extent and the least smoothed line (Red) at the highest extent.

Bullish Bearish Bitcoin Trend Rainbow Charts - Rainbow Charts BTCUSD Indicators

Bitcoin Trend Continuation Signal

As the Bitcoin trend maintains its trajectory, whether upwards or downwards, the rainbow charts track the Bitcoin price movements closely. The further the Bitcoin price deviates from the rainbow chart structure, the stronger the indication that the Bitcoin trend is likely set to persist: this is interpreted as a signal of trend continuation. Concurrently, the lines comprising the indicator will expand their separation, which itself serves as an additional signal confirming trend continuation.

Bitcoin Trend Reversal Signal

When bitcoin price begins moving toward the rainbow charts then this is seen as a trend reversal. The width of the indicator lines also contracts/lots signifying a market trend reversal. The reversal Signal is confirmed when the bitcoin price penetrates through all the rainbow charts and the direction of the rainbow charts indicator also reverses in their respective direction.

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