What's Rainbow Indicator? - Definition of Rainbow Indicator
Rainbow indicator - Rainbow indicators is a popular indicator which can be found on the - Indicators List on this website. Rainbow indicator is used by traders to forecast price movement based on the chart price analysis done using this Rainbow indicator. Traders can use the Rainbow buy and Sell Signals explained below to determine 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 and market exit.
What's Rainbow Indicator? Rainbow Indicator
How Do You Combine Indicators with Rainbow? - Adding Rainbow Indicator in MT4
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 Indicator
- MACD
- Bollinger ##BandsBand
- Stochastic Oscillator
- Ichimoku Kinko Hyo 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 which will determine the trend of the market as well as others that confirm the market trend. By combining indicators that 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 practice demo account on the MetaTrader 4 software.
This Rainbow based system will also help traders to determine when there is a market reversal based on the indicators signals generated and therefore trades can know when to exit the market if they have open trades.
What is Rainbow Indicator Based Trading? Indicator based system to analyze price & provide trade signals.
What's the Best Rainbow Forex Trading Strategy?
How to Choose 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 tutorial them with coming up with the best strategy for trading market based on the Rainbow indicator system.
How to Create Rainbow Forex Strategies
- What is Rainbow Indicator System
- Creating Rainbow Forex System Template
- Writing Rainbow Forex System Rules
- Generating Rainbow Buy and Rainbow Sell Signals
- Creating Rainbow Indicator System Tips
About Rainbow Indicator Described
Rainbow Charts Analysis and Rainbow Charts Signals
Created by Mel Widner
This is a trend following indicator, similar to the Moving Averages - it's plotted using a 2 period simple MA. The MA is then smoothed to create a total of ten MAs. 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 currency trend, each Moving Average is applied with a different colors so as to look as a rainbow.
Forex 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 moving 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 Trading Trend
When the trend is a bearish downwards then the rainbow charts will be heading downward, the major smoothed line (Violet) will be at the bottom and the least smoothed 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 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 signal. The width of the indicator lines also contracts signifying a trend reversal signal. The reversal Signal is confirmed when price penetrates through all the rainbow charts & the direction of the rainbow charts also reverses in their respective direction.
