New Breed of Technical Indicators — Blue

Discussing a New Technical Indicator and Coding it in TradingView

Sofien Kaabar, CFA

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This article discusses one of the indicators of a set called the Rainbow Indicators which are structured and unique combinations of price-derived techniques aimed to help the trader predict reversals or to confirm the on-going trend. The indicator discussed is called the Blue indicator, a contrarian method based on the concept of slopes.

Creating the Blue Indicator

The slope of a time series is the rate of change between the current values and previous values. A rising market will generally have a positive slope until it approaches zero and starts turning negative which coincides with a falling market.

The Blue indicator calculates the slope of the market from a number of periods in the past (by default 14 or 21) and then applies the RSI (by default 14 or 21) on the slope to have a bounded calculation that aim to tell when the slope is losing momentum.

The Blue indicator is used as follows:

  • A bullish signal is generated whenever the indicator surpasses 30 after having been below it.
  • A bearish signal is generated whenever the indicator breaks 70 after having been above it.

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Sofien Kaabar, CFA
Sofien Kaabar, CFA

Written by Sofien Kaabar, CFA

Top writer in Finance, Investing, Business | Trader & Author | Bookstore: https://sofienkaabar.myshopify.com/

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