The indicator is taken from Alexander Elders "Triple Screen System," minus using the Weekly MACD as a filter/trend. I believe waiting for the force index and the weekly MACD histogram to line-up is uber conservative and a trader will miss too many signals (In my opinion).
The indicator is for a pullback trader. A trader that waits for a trend to develop then enters on a pullback.
The indicator defines an uptrend start: as the 13 ema crossing above the 26 ema. It defines a downtrend start: as the 13 ema crossing below the 26 ema.
The pullback in an uptrend: 13 ema is above the 26 ema. Elders-Force-Index is below the zero line. Price low has crossed below the 13 ema (one can also say price closes below the 13 ema if they so wish).
The pullback in a downtrend: 13 ema is below the 26 ema. Elders-Force-Index is above the zero line. Price high has also crossed above the 13 ema.
Please note that the pullback signals do not necessitate an automatic buy or sell (the instrument can be still pulling back deeper and not ready to resume it's trend.) One should place orders above (long) or below (short) bars with the pullback signals. Do so on signals until orders are filled.
Although the indicator is meant for pullbacks one can make an aggressive entry at the onset of a crossover of ema's.
For clarity background colors has been added to the indicator.
works well on daily time frame. Also look at intraday (5) minute time frame on trending stocks (news, earnings, volume, etc.)
Best pullback indicator, really useful the colors.
Bustabigballs
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This is Brilliant, I use in Tandem with Stage Analysis for all my entries for longs and trading around my core position , Pull backs on the daily Time frames . Thank -you. I have also found this is one of the few that work in the UK markets as they are quite tricky to trade.
XBTSNEKO
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Is it possible to turn it into strategy
Slick_SiD
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Awesome indicator when used with supply and demand zones, it plots very ideal entries for tiny stops and major gains. Great work!
sdkujn
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wish i had that cool color scheme you got. It's super rad.
dhman2012
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Hey @fhenry0331 great work with this indicator. What other indicator would you combine this with to get a solid buy/ sell signal?
berkcollective
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@dhman2012, If it's a triple screen strategy akin to Elder's recommendation, then a trailing stop like SuperTrend would be a good indicator to find entry points on the lower time-frame. You can combine this with simple price-action breakouts in the direction of the reference trend.