Employ any one of the tools and procedures below to define the trend.
MACD: Use the buy values as inputs: 8,17 and 9. If the MACD line is above the trigger line, the primary trend is up. If the MACD line is below the trigger line, the primary trend is down.
Keltner Channels: Define a narrow channel with 10 and 1. Ignore the middle line. We are interested in the direction of the two outer channel lines. If both lines are moving up, trend is up. If both lines are moving down, trend is down. Sometimes, you will visually see that one line may be moving up while the other may be moving down. This is a sideways move. In such cases, it is best to wait for the lines to eventually take a direction. With Keltner channels, sometimes the lines appear to be flat. Just assume that the flat lines are sideways. We are interested in the broad view, not in extreme precision.
Linear Regression: Apply a 21 period linear regression line. The Linear Regression is available in the Moving Average indicator. If the line is moving up, the trend is up. if the line is moving down, the trend is down. You can also apply the query – ‘Short term trend is up’ to get this information. In the query, the brown bars represent an up trend. If the bar is not brown, it is a downtrend.
2MA Difference: Apply the 2 MA difference indicator with these settings: MA 1 = 3, MA2 = 10, Calc basis = Close, Average Type = Weighted. Select the Above/Below option. When the lines are green, the trend is up. When the lines are red, the trend is down.
+DMI/-DMI: Apply the ADX indicator with the default of 14. In the Indicators dialog, unchek ‘ADX Plot’ and also unchek ‘Mid Point’. The other two plots ‘ +DI and -DI’ should be checked. We wan to plot the +DI and -DI and we do not want to plot the ADX or the mid line. If the +DI (green) is above the -DI (red), then the trend is UP. If the +DI (green) is below the -DI (red) then the trend is down.
There are as many ways of identifying the trend, as stars in the sky. Do we really need all of them ? No. Eventually, all the methods will take us to the same destination. So, focus on any one method, then stick to it.
