Color-Coded Candles Combining Trend and Strength Oscillators

Summary

This indicator colors candles according to the direction of a trend oscillator and a separate measure of movement strength. Users can choose MACD, Momentum, or the directional indicator from ADX for trend direction, and ATR or ADX for strength. When both measures rise, candles are green; falling trend and strength produce gold; other combinations use cyan or red. Additional colors identify the trend oscillator crossing its zero level.

The author describes using the colors to distinguish impulses from corrections and watching for a return to the impulse color as a possible continuation entry. In an uptrend, a failure to make a new high is presented as a possible signal for a correction toward the eight-period EMA; the reverse pattern is proposed for downtrends. The post emphasizes that settings may need adjustment by timeframe, instrument volatility, and user sensitivity. It offers no systematic test results, and its signals are presented as visual guidance rather than validated forecasts.

Key ideas

• The indicator combines the direction of a selected trend oscillator with the change in a separate strength oscillator.
• MACD, Momentum, or ADX directional movement can supply trend direction, while ATR or ADX can measure strength.
• Color changes distinguish rising or falling combinations and mark crossings of the trend oscillator's zero level.
• The author interprets changing colors and failure to extend highs or lows as possible correction cues.
• Parameters may need adjustment across instruments and chart timeframes, and no performance testing is reported.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.