New Breed of Technical Indicators — Blue
<p>This article discusses one of the indicators of a set called the Rainbow Indicators which are structured and unique combinations of price-derived techniques aimed to help the trader predict reversals or to confirm the on-going trend. The indicator discussed is called the Blue indicator, a contrarian method based on the concept of slopes.</p>
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<h1>Creating the Blue Indicator</h1>
<p>The slope of a time series is the rate of change between the current values and previous values. A rising market will generally have a positive slope until it approaches zero and starts turning negative which coincides with a falling market.</p>
<p>The Blue indicator calculates the slope of the market from a number of periods in the past (by default 14 or 21) and then applies the RSI (by default 14 or 21) on the slope to have a bounded calculation that aim to tell when the slope is losing momentum.</p>
<p>The Blue indicator is used as follows:</p>
<ul>
<li><strong><em>A bullish signal is generated whenever the indicator surpasses 30 after having been below it.</em></strong></li>
<li><strong><em>A bearish signal is generated whenever the indicator breaks 70 after having been above it.</em></strong></li>
</ul>
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