How do I read this indicator?
- Is the blue band between and not touching the green or red clouds? The condition is ranging.
- Is the blue band touching the green cloud? The condition is a bullish trend.
- Is the blue band touching the red cloud? The condition is a bearish trend.
The trend trading rules are exactly the same as the default Neapolitans, but include an extra condition.
A trend has started once 2 conditions are met:
Isn't this just a 21 trading pull-backs strategy?
No. The 21 alone is not sufficient in my opinion to define a range or trend technically. Always buying the 21 pull-back, especially in a range, is not a great strategy by itself unless you've already identified price as trending. Baus Bands adds that trend identification.
Why make this?
Baus Bands show the conditions I personally use for catching trends and identifying ranges with these indicators, and shows only the information I use.
What's the purpose of the ATR band around the 21 EMA?
Sometimes price will open and close below the 21 and cause some technical analysts will say the trend is over. I added the ATR specifically to get a based, upper and lower bound range around the 21 . that way I have an acceptable price range where price could move past the 21 and still keep a trend valid using similar rules. I then saw that so long this ATR band (not the 21 itself) was touching those trending clouds, then the trend has a good chance of continuing as long as that was true.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.