By the Numbers
These two lower panels are from the five-minute chart configuration that includes the numbers 24 and 15 in the name of the template. They are designed, NOT to dictate what traders are to do, but rather, merely to
assist them in acting
objectively by serving as visual representations of
statistical information. They are tools traders can refer to before making final decisions to see if the
numbers agree.
So then, how should these two lower-panel indicators be interpreted? The answer to this question is not yet set, so the following are simply ideas regarding this topic that
might turn out to be valid (or not).
For starters, the top panel's bold, dark goldenrod bands represent reversal levels. So, if the dark gray oscillator makes contact with either of them, one should be prepared to see price turn around and head in the opposite direction in relatively short order, if only temporarily.
On the other hand, if the oscillator
breaches the bold, dark goldenrod upper or lower band to the
exterior of the channel, it suggests that the corresponding asset has in all probability begun trending with the support of some
serious momentum.
Once this happens, as soon as the oscillator re-enters the interior of the channel, the run is presumed over.
The oscillator’s "directional tendency"
between the two bold dark goldenrod bands generally reflects the trajectory of intraday price flow. This is
especially true when the oscillator is climbing higher
above the top
thin goldenrod
inner band, or crawling lower
below the bottom
thin goldenrod
inner band.
If the oscillator is more-or-less restricted to the (gray) zone
between these two thin goldenrod
inner bands, the market might be all but "dead;" or at the very least, its sentiment or bias could be extremely ambiguous, meaning that traders shouldn't even
think about entering a position. (Of course, all of this
must be confirmed by referring to the top/main chart, to ensure that the numbers comport with reality.)
But, as soon as the oscillator breaks out above or below the upper or lower inner band, it means the short-term trend is (probably) back in business. (The bottom window can help to confirm whether this true—but more about that in a moment.)
And speaking of the lower "Christmas-color" panel, if its two oscillators cross below the center of the channel, the gist of the short-term trend is probably bearish. Conversely, when the two oscillators cross above the center of the channel, the gist of the short-term trend is likely bullish. However, there should not be a lot of weight assigned to these maneuvers in that such fluctuations can occur relatively frequently and last only momentarily, thereby highlighting what's apt to be brief and insignificant price action.
So then, the
real value of of this panel is in
comparing it with the one directly above. For when the two oscillators in the bottom window cross to one side or the other SIMULTANEOUSLY WITH the dark gray oscillator crossing above or below the upper or lower thin dark goldenrod inner band in the middle window (or even just the CENTER of the panel), then even temporary fluctuations might not be so insignificant...
And if the two oscillators break to the
outside of the upper (green) or lower (red) band, it might (or might not) signal the start of something really big. So long as they maintain the same trajectory, expect to see price stay the course (
especially if the dark gray oscillator in the center window remains positioned on the outside of the region bounded by the bold dark goldenrod bands). But, as soon as they start to lose ground, price is almost sure to immediately reverse direction.
Again, these are merely graphic aids designed to reflect statistical data that should theoretically assist a trader in confirming that he or she is acting
objectively; and they are used in
conjunction with the indicators plotted in the upper/main chart,
none of which appear in the above images.
