This idea and the logic behind might seems a little strange, but as on my knowledge, it is unique.
The practical uses of this are as follows and it can be don on any time frame:
1. Identify Trend Direction - As you can see in the chart Red boxes larger than green ones, and so it is very clear and easy to spot trend direction.
2. Identify Trend Reversal - The MA 100 crossing to the down side, and the green rectangle that was formed as the last leg of the ZigZag , it is showing a trend reversal.
3. Identify Potential Price Future Movements - There will always be formed one green and one red rectangle , and it is very easy to spot future price movements. So we can can approximate the next 2 rectangles to be formed. Next to be formed, will be a small red rectangle , possible at the MA level, and than we should see a big green rectangle , at the next resistance level .
4. Easy to identify support and resistance level.
5. You get more confidence for long TP, as when you trade in trend direction, you will have more chances to have TP Hit and vice versa for trading against the trend.
Steps on how to create such a chart:
1. Add MA 100 indicator.
2. Add any colored Zigzag indicator. If necessary increase settings. In given example it is set for 20.
3. Switch to line chart and set maximum transparency for the color of the line
4. Manually draw rectangles with the same color as ZigZag .
Many might not agree with this, and it is OK, because we are all different traders with different personality and what is working for some of us, might not work for others.
For me personal, any method or trick that can make me spotting certain patterns of the chart, easier and faster, it will be a plus and it will make my job easier.
Keep It Simple.
Don't Stumble Trading! Trade Safe!
The practical uses of this are as follows and it can be don on any time frame:
1. Identify Trend Direction - As you can see in the chart Red boxes larger than green ones, and so it is very clear and easy to spot trend direction.
2. Identify Trend Reversal - The MA 100 crossing to the down side, and the green rectangle that was formed as the last leg of the ZigZag , it is showing a trend reversal.
3. Identify Potential Price Future Movements - There will always be formed one green and one red rectangle , and it is very easy to spot future price movements. So we can can approximate the next 2 rectangles to be formed. Next to be formed, will be a small red rectangle , possible at the MA level, and than we should see a big green rectangle , at the next resistance level .
4. Easy to identify support and resistance level.
5. You get more confidence for long TP, as when you trade in trend direction, you will have more chances to have TP Hit and vice versa for trading against the trend.
Steps on how to create such a chart:
1. Add MA 100 indicator.
2. Add any colored Zigzag indicator. If necessary increase settings. In given example it is set for 20.
3. Switch to line chart and set maximum transparency for the color of the line
4. Manually draw rectangles with the same color as ZigZag .
Many might not agree with this, and it is OK, because we are all different traders with different personality and what is working for some of us, might not work for others.
For me personal, any method or trick that can make me spotting certain patterns of the chart, easier and faster, it will be a plus and it will make my job easier.
Keep It Simple.
Don't Stumble Trading! Trade Safe!