Introducing the Bars Since EMA Touch IndicatorHey there traders, Stock Justice here! Are you ready to elevate your trading game? Today, we're going to delve into an exciting indicator I call 'Bars since EMA touch', or 'BSET' for short. Buckle up, because we're about to kick your technical analysis up a notch!
The BSET, at its heart, revolves around the Exponential Moving Average, or EMA. When setting up BSET, you'll be prompted for the length of the EMA, with the default being 9. This number represents the number of bars that will be averaged to create your EMA line. A higher value smooths out the line, reducing noise but potentially delaying important signals. A lower value makes the EMA more responsive, but at the risk of responding to market noise.
BSET calculates how many bars it's been since the price last touched the EMA. A positive number indicates the number of bars since the price was last above the EMA, and a negative number shows how long it's been since the price was below the EMA.
BSET also uses the MACD and signal line to color-code these bars. Blue and red bars indicate price is above the EMA, with blue signaling an upward trend and red signaling a possible downturn if the bar number is above 3. White and green bars indicate price is below the EMA, with white signaling a downward trend and green indicating a possible upturn if the bar number is above 3.
This color-coding can be a useful tool to quickly determine whether a potential reversal is in the making or if the current trend is likely to continue. But that's not all! BSET takes it a step further by keeping track of how often price trends extend beyond certain thresholds, updating these thresholds if necessary.
These thresholds, shown as red and green lines on the histogram, indicate the 15% percentile for bull and bear trends, respectively. If more than 20% of trends exceed the current threshold, it's adjusted upwards. This gives you a historical context for how long trends usually last and can help you spot when a trend is overextended and might be due for a reversal.
BSET is an innovative tool that combines trend tracking with volatility in a unique way, helping you better understand market dynamics and make informed trading decisions. Just remember, every indicator, BSET included, is just a tool. Always use them in conjunction with other analysis methods and never risk more than you're willing to lose.
That's it for now, traders. Keep your eyes on the charts and remember: Trade safe, trade smart! This is Stock Justice, signing off!
