- The cloud comprising of a 10 period and a 30 period .
- When the cloud is green you should be looking for long entries.
- When the cloud is red you should be looking for short entries.
- Price is most above a green cloud and most below a red cloud.
- Being within the cloud indicates indecision.
The blue and white lines on the indicator show the relationship between price and momentum.
They can be used to spot reversals in two ways:
- The first is a divergence between price (blue line) and (white line)
- If the price makes a lower low but the makes a higher low this shows the trend is weakening and may be reversing soon (as can be seen by the two yellow lines on the chart).
The second is a simple crossover:
- When the white line crosses the blue line to the upside this signals a long entry.
- When the white line crosses the blue line to the downside this signals a short entry.
I've been using it mostly to trade forex & crypto basing my trades off the 15min chart but making sure the trend is not contradicting the higher timeframes.
See the video I created as a rough guide for how I use it to give you some ideas: https://www.youtube.com/watch?v=3Kb_sqAUX4A