Supertrend Channels
Apr 28, 2022
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The Supertrend is one of the most used indicators by traders when it comes to determining whether the market is up-trending or down-trending.
This indicator is displayed as a trailing stop, showing a lower monotonic extremity during up-trends and an upper monotonic extremity during down-trends. Today we propose a channel indicator based on the Supertrend trailing stop using trailing maximas/minimas.
Settings
- Length: Atr length used by the Supertrend indicator.
- Mult: Multiplicative factor for the Atr used by the Supertrend indicator.
Usage
The ability of the indicator to show an up-trend or down-trend is the same as the Supertrend, with rising channels when an up-trend is detected by the Supertrend and declining channels when a down-trend is detected by the Supertrend.
The look of the channels can remind of the Donchian channels indicator, and as such a similar usage can be appropriate. The extremities can for example be used as supports and resistances.
Additionally, the channel's average can be used to filter out noisy variations in the price while keeping a good distance from the price.
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