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Rainbow Charts Expert Advisor Setup - Setting Up Rainbow Charts Expert Advisor

Rainbow Charts Expert Advisor Setup - Setting Up Rainbow Charts Expert Advisor - A trader can come up with an Rainbow Charts Expert Advisor based on the Rainbow Charts indicator explained below.

Rainbow Charts Expert Advisor rules can be combined with other indicators to come up with other EA Robots that trade using rules based on two or more indicators combined to form a system.

Rainbow Charts Analysis & Rainbow Charts Signals

Developed by Mel Widner

This is a trend following indicator, similar to the MAs - it is plotted using a 2 period simple Moving Average. The Moving Average is then smoothed to create a total of ten MAs. The first MA 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 currency trend, each Moving Average is applied with a different colors so as to look as a rainbow.

Rainbow Charts Trading Indicator - Rainbow Charts Automated Trade System - Setting Up Rainbow Charts EA

Rainbow Charts Expert Advisor Setup

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Technical Analysis and How to Generate Signals

Bullish Trend/ Upwards Trend

When the market trend in the 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/Downwards Trend

When the market 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.

Bullish Bearish Trend Rainbow Charts Trading Indicator - Rainbow Charts Automated Robot Expert Advisor

Bullish Signal and Bearish Signal - Forex Rainbow Charts Expert Advisor Setup

Trend Continuation Signal

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

Trend Reversal Signal

When price starts moving towards the rainbow charts then this is seen as a trend reversal. The width of the indicator lines also contracts signifying a trend reversal. 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.