What's Rainbow Indicator? - Definition of Rainbow Indicator
Rainbow indicator - Rainbow indicators is a popular indicator which can be found in the - Indicators List on this site. Rainbow indicator is used by the FX traders to forecast price movement based on the chart price analysis done using this Rainbow indicator. Traders can use the Rainbow buy & Sell Trading Signals explained below to figure out when to open a buy or sell trade when using this Rainbow indicator. By using Rainbow and other indicators combinations traders can learn how to make decisions about market entry & market exit.
What's Rainbow Indicator? Rainbow Indicator
How Do You Combine Indicators with Rainbow? - Adding Rainbow Indicator on MT4 Platform
Which Indicator is the Best to Combine with Rainbow?
Which is the best Rainbow indicator combination for trading?
The most popular indicators combined with Rainbow are:
- RSI
- MAs Moving Averages Trading Indicator
- MACD
- Bollinger Band
- Stochastic Oscillator
- Ichimoku Indicator
- Parabolic SAR
Which is the best Rainbow indicator combination for trading? - Rainbow MT4 indicators
What Indicators to Combine with Rainbow?
Find additional indicators in addition to Rainbow indicator that will determine the trend of the price and also others that confirm the market trend. By combining indicators which determine trend and others that confirm the trend & combining these indicators with Rainbow indicator a trader will come up with a Rainbow based system that they can test using a demo account on the MT4 platform.
This Rainbow based system will also help traders to figure out when there is a market reversal based on the technical indicators signals generated and thence trades can know when to exit the market if they have open trades.
What is Rainbow Indicator Based Trading? Indicator based system to analyze and interpret price & provide trade signals.
What's the Best Rainbow Forex Trading Strategy?
How to Choose & Select the Best Rainbow Strategy
For traders researching on What is the best Rainbow strategy - the following learn tutorials will help traders on the steps required to course them with coming up with the best strategy for market based on the Rainbow indicator system.
How to Develop Rainbow Strategies
- What is Rainbow Indicator System
- Creating Rainbow Forex System Template
- Writing Rainbow Forex System Rules
- Generating Rainbow Buy and Rainbow Sell Trading Signals
- Creating Rainbow Indicator System Tips
About Rainbow Indicator Described
Rainbow Charts Analysis and Rainbow Charts Signals
Created and Developed by Mel Widner
This is a price trend following technical indicator, similar to the MAs Moving Averages - it is drawn using a 2 period simple MA. The MA is then smoothed out to make a total of 10 MAs Moving Averages. The first Moving Average is the basis, then the next 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 market trend, each Moving Average is applied with a different colours so that to look as a rainbow.
FX Analysis and Generating Signals
Bullish Trading Trend/ Upwards Trading Trend
When the trend in the market is Upward/bullish trend, then the rainbow will be heading upwards, the least smoothed out line will be at the top of the trading indicator, this is the red line & the major smoothed line , Violet will be at the bottom of the trading indicator, this is the violet line.
Bearish Market/Downward Trading Trend
When the trend is a bearish downwards then the rainbow charts will be heading downwards, the major smoothed line (Violet) will be at the bottom and the least smoothed out line - Red will be at the top.
Trend Continuation Signal
As the market trend continues in one direction upward or downward, the rainbow charts follow the price closely. The more the price moves away from the rainbow chart the more the market trend is likely to continue, this is considered as a market trend continuation trade signal. The indicator lines also will continue to expand its width; this is also another trend continuation trade signal.
Trend Reversal Signal
When price begins heading towards the rainbow charts then this is seen as a market trend reversal signal. The width of the technical indicator lines also contracts/lots signifying a price trend reversal signal. The reversal Signal is confirmed when price penetrates through all the rainbow charts and the direction of the rainbow charts also reverses in the respective direction.
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