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 bitcoin trend is a bearish downwards then the rainbow charts will be moving downward, the major smoothed line (Violet) will be at the bottom and the least smoothed out line (Red) will be at the top.

Bullish Bearish Bitcoin Trend Rainbow Charts - Rainbow Charts BTCUSD Indicators

Bitcoin Trend Continuation Signal

As the bitcoin trend continues in one direction up or down, the rainbow charts follow the bitcoin price closely. The more the bitcoin price moves away from the rainbow chart the more the bitcoin trend is likely to continue, this is considered as a bitcoin trend continuation trading signal. The indicator lines will also continue to expand its width; this is also another bitcoin trend continuation signal.

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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