Rainbow Charts XAUUSD Technical Analysis and Rainbow Charts XAUUSD Signals
Developed by Mel Widner
This is a xauusd trend following indicator, similar to the moving averages - it is drawn using a 2 period simple moving average. The 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 and so on. This forms a rainbow shape of the xauusd trend, each moving average is applied with a different colors so as to look as a rainbow.
XAUUSD Technical Analysis and Generating XAUUSD Signals
Bullish Trend/ Upward Trend
When the xauusd trend in the gold market is Upward/bullish trend, then the rainbow will be moving upwards, the least smoothed line will be at the top of the indicator, this is the red line and the major smoothed line will be at the bottom of the indicator, this is the violet line.
Bearish Market/Downward Trend
When the xauusd trend is a bearish downward then the rainbow charts will be moving downwards, the major smoothed line (Violet) will be at the bottom and the least smoothed line (Red) will be at the top.
XAUUSD Trend Continuation Signal
As the xauusd trend continues in one direction up or down, the rainbow charts follow the gold price closely. The more the gold price moves away from the rainbow chart the more the xauusd trend is likely to continue, this is considered as a xauusd trend continuation signal. The indicator lines will also continue to expand its width; this is also another xauusd trend continuation signal.
XAUUSD Trend Reversal XAUUSD Signal
When gold price starts moving towards the rainbow charts then this is seen as a xauusd trend reversal xauusd signal. The width of the indicator lines also contracts signifying a xauusd trend reversal xauusd signal. The reversal Signal is confirmed when the gold price penetrates through all the rainbow charts and the direction of the rainbow charts also reverses in their respective direction.