Rainbow Charts CFD Technical Analysis and Rainbow Charts CFD Signals

Developed by Mel Widner

This is a cfd trend following indicator, similar to the moving averages - it's drawn using a 2 period simple moving average. Moving average is then smoothed to create a total of ten moving averages. The first moving average is the basis, then the next moving average is calculated using the first one, the third is then calculated using the second one & so on. This forms a rainbow shape of the cfd trend, each moving average is applied with a different colors so as to look as a rainbow.

CFD Technical Analysis & Generating CFDs Signals

Bullish CFD Trend/ Upwards CFDs Trading Trend

When the cfd trend in the cfds trading market is Upwards/bullish trend, then the rainbow will be heading upwards, the least smoothed line will be at the top of the indicator, this is the red line & the major smoothed line will be at the bottom of the indicator, this is the violet line.

Bearish Market/Downward CFD Trading Trend

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

CFD Trading Trend Continuation Signal

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

CFD Trend Reversal CFD Signal

When cfd price starts moving towards the rainbow charts then this is seen as a cfd trend reversal signal. The width of the indicator lines also contracts signifying a cfd trend reversal signal. The reversal Signal is confirmed when the price penetrates through all the rainbow charts and the direction of the rainbow charts also reverses in their respective direction.