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Rainbow Trend [Mc]

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1. Momentum-Based Foundation
  • This indicator measures the velocity and strength of price changes.
  • Rising momentum indicates that price movement (upward or downward) has strength behind it.
  • When momentum weakens or reverses, it often signals a potential trend reversal.

2. Long-Term Time Frame
  • Unlike traditional indicators like RSI or Stochastic, which use shorter lookback periods (e.g., 14 days), this indicator uses a much longer period, such as 50 to 200 days.
  • This extended range helps smooth out volatility and provides a clearer view of the primary trend.


3. Multicolored Gradient Lines
  • The indicator displays multi-layered colored curves, often with a rainbow-like gradient.
  • Red or pink areas indicate strong selling pressure or peak momentum in an uptrend.
  • Green or bright green dots often suggest recovery or bottoming momentum.
  • Orange or yellow colors indicate neutral or transition zones, awaiting trend confirmation.


4. Horizontal Levels (Overbought/Oversold Zones)
  • The chart includes reference levels such as +160, 0, -40, and -120 (as shown in the image).
  • These levels help identify when momentum is reaching overbought or oversold conditions.
  • Reversals often begin near the upper or lower extremes of these zones.


5. Reversal Signal Markers
  • Red dots at the top indicate extreme bullish momentum and potential topping zones.
  • Green dots at the bottom suggest oversold conditions and potential bullish reversals.

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