Category · 31 articles
Trend indicators
A trend indicator tries to answer two questions: which way is price moving, and is it moving at all or only ranging. Moving averages smooth the closes, directional indicators such as the DMI and the Aroon measure the strength of the move, and stops and bands such as the parabolic SAR follow price and flip when it turns. This category has 31 trend indicator guides. Trend is one of four indicator families; see all of them on the indicators page.
These guides explain how an indicator is calculated and how traders read it. The pattern test bench does not measure indicators. Some guides run their rule on real bars (Bitcoin, the S&P 500 ETF, EUR/USD) and give the sample size; those worked examples are not bench results. For tested patterns, see the pattern statistics table and the methodology.
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Moving Average Indicator: SMA, EMA, WMA and Hull Compared, With Their Lag Measured on Real PricesA 20-bar SMA lagged about 10 bars on real prices, an EMA 6 to 7, a Hull 3, and the faster ones mostly crossed more often. The main moving averages compared.
Ichimoku Cloud: The Five Lines, the 9/26/52 Settings and Every TK Cross on BitcoinEvery TK cross on weekly Bitcoin since 2019: all 4 bearish crosses above the cloud were followed by a rise. The five Ichimoku lines and 9/26/52 settings.
Parabolic SAR: Wilder's Formula, Settings, and What the Stop and Reverse Rules Did on Real PricesWilder's Parabolic SAR as stop and reverse: it beat holding on falling Bitcoin, lost money on the rising S&P 500 ETF. Formula, settings, recent Bitcoin trades.
Directional Movement Index (DMI) and ADX: Wilder's Formula, How to Read +DI, −DI and ADX, and a Test on Real PricesThe Directional Movement Index has three lines: +DI, −DI and the ADX. Wilder's formula, how to read them, and a test of DI crossings with an ADX filter.
Moving averages
Averages of past prices with different weightings, and the tools built from several of them, such as crossovers, rainbows and the Williams Alligator.
- Moving Average Indicator: SMA, EMA, WMA and Hull Compared, With Their Lag Measured on Real PricesA 20-bar SMA lagged about 10 bars on real prices, an EMA 6 to 7, a Hull 3, and the faster ones mostly crossed more often. The main moving averages compared.
Moving Average Crossover: Golden Cross and Death Cross on the S&P 500 Since 1970, and Three Pairs ComparedEvery golden cross of the S&P 500 since 1970, what followed, and how the 9/21, 20/50 and 50/200 rules did against holding the index.
ALMA Indicator: Arnaud Legoux Moving Average Formula, the 9, 0.85, 6 Settings and How It ComparesALMA puts about 52% of its weight on the two newest bars of a 9-bar window: the formula, the 9, 0.85, 6 settings, and how it tracked Bitcoin vs the EMA.
Hull Moving Average (HMA): Alan Hull's Formula, Its Lag Measured, and a Test of Its Turning Points on Real PricesA 20-bar Hull moving average lagged 3 bars, a simple one 10, but on Bitcoin price crossed it nearly twice as often. Hull's formula and a test of its turns.
McGinley Dynamic Indicator: Formula, Settings and a Test Against the EMA in 1987In the 1987 crash the McGinley Dynamic stayed 4.34% from the close, a 20-day EMA 7.14%, but the EMA was closer in the rise. Formula and N setting.
VWMA Indicator: Volume-Weighted Moving Average Formula, VWMA vs SMA and VWMA vs VWAPThe VWMA weights each close by its volume. Formula, VWMA vs SMA and vs VWAP, and the 4.29% gap on Bitcoin in 2026 that followed a day of triple volume.
Rainbow Charts: Mel Widner’s Ten Moving Averages, Not the Bitcoin Rainbow ChartMel Widner’s Rainbow Charts explained: ten recursive moving averages, how to read their order and spread, and how they differ from the Bitcoin rainbow chart.
Rainbow Oscillator: Formula, Rainbow Bandwidth and a Daily Bitcoin ExampleRainbow Oscillator: Mel Widner's formula, the rainbow bandwidth, how to read both lines, and what they showed on daily Bitcoin in 2026.
Williams Alligator Indicator: Formula, How to Read the Jaw, Teeth and Lips, the Gator Oscillator, and a Test on Real PricesThe Williams Alligator: three shifted, smoothed averages of the median price, how to read it, the Gator Oscillator, and a test that lost 21.31% on Bitcoin.
T-Line Trading: The 8-Day EMA Rule, How It Is Read and How It DidThe T-Line is the 8-day EMA with a stay-long-while-it-closes-above rule. Its formula, how it is read, and how the rule did on the S&P 500 ETF and Bitcoin.
Trend strength and oscillators
Indicators that measure how strong or how directional the move is, or that strip the trend out to show cycles.
- Directional Movement Index (DMI) and ADX: Wilder's Formula, How to Read +DI, −DI and ADX, and a Test on Real PricesThe Directional Movement Index has three lines: +DI, −DI and the ADX. Wilder's formula, how to read them, and a test of DI crossings with an ADX filter.
Aroon Indicator: Formula, Aroon Up and Down, Settings and a Real Bitcoin ExampleAroon counts the bars since the 25-bar high and low. The formula, how to read Aroon Up and Down, and what crosses did on Bitcoin and the S&P 500.
Trend Intensity Index (TII): Formula, the 80 and 20 Rules, and an Example on Real PricesThe Trend Intensity Index: share of 30 closes' deviation above a 60-bar average, Pee's 80 and 20 stop-and-reverse rules, and every trade on daily Bitcoin.
Polarized Fractal Efficiency (PFE): Formula, Reading as a Trend Filter, and an S&P 500 ExamplePFE compares the straight line price traveled over ten bars with the path it took. The formula, why its scale depends on price, and a year of S&P 500 data.
Schaff Trend Cycle (STC) Indicator: Formula, Settings and the 25/75 Rules on Real DataThe Schaff Trend Cycle (STC) passes a 23/50 MACD twice through a stochastic. Exact formula, settings, the 25/75 rules and how they fared on real daily data.
Relative Vigor Index (RVI): Formula, Signal Line and a Cross Test Against the RSITraded on every signal-line cross, the Relative Vigor Index lost 32.98% on daily Bitcoin and 39.95% on the S&P 500 ETF. Ehlers' formula and the full test.
Relative Momentum Index (RMI): Formula, Settings and How It Compares With the RSIThe RMI is the RSI computed on changes over several days. On 534 daily Bitcoin bars, RMI(14, 5) spent 135 bars above 70, against 29 for the RSI(14).
Balance of Power Indicator (BOP): Formula, Raw vs 14-Bar Signals and the Gap ProblemLivshin's Balance of Power scores each bar from −1 to +1 as (close − open) / (high − low). Raw vs 14-bar signals, and why gaps fool it on stocks.
Detrended Price Oscillator (DPO): Formula, Cycle Length and the Real-Time Lag TrapThe Detrended Price Oscillator compares each price with a centered moving average: the formula, why it stops 11 bars early, and the cycles it measured.
Mass Index Indicator: Dorsey's Formula, the 27/26.5 Reversal Bulge and What FollowedDorsey's Mass Index bulge, above 27 then below 26.5, gives no direction. Every bulge on Bitcoin, the S&P 500 ETF and 1987, and what the price did next.
MACD Indicator: Formula, What 12, 26, 9 Means, and the Signal Line Rule on Real PricesBuying every MACD signal line cross on a year of the S&P 500 ETF won 3 of 11 trades: +6.85% vs +14.83% for holding. The formula and 12, 26, 9 explained.
Stops, bands and levels
Trailing stops, envelopes, clouds and price levels drawn around the trend.
- Parabolic SAR: Wilder's Formula, Settings, and What the Stop and Reverse Rules Did on Real PricesWilder's Parabolic SAR as stop and reverse: it beat holding on falling Bitcoin, lost money on the rising S&P 500 ETF. Formula, settings, recent Bitcoin trades.
Chande Kroll Stop: Formula, the Two Sets of Settings, and a Daily Bitcoin ExampleTushar Chande and Stanley Kroll’s volatility stop, from the book that introduced it: how its two lines come from the highest high, the lowest low and the…
Gann HiLo Activator: How It Works, Its Settings and What the Flips Did on Real ChartsThe Gann HiLo Activator flips between an average of highs and of lows. Why 3 bars flip too often, and what its flips did on Bitcoin and the S&P 500 ETF.
Envelope Channel Indicator: Moving Average Envelope Formula, the Right Percentage, and Real ExamplesA moving average envelope puts two bands a fixed percent around an average. Which percent fits, and why Bitcoin's first close above it began a 25% rise.
STARC Bands (Stoller Average Range Channels): Formula, Settings, and Every Band Break on Real PricesSTARC Bands put a 6-bar average inside bands two ATRs wide. Formula, settings, and every close outside the bands on real daily prices, with what happened next.- Ichimoku Cloud: The Five Lines, the 9/26/52 Settings and Every TK Cross on BitcoinEvery TK cross on weekly Bitcoin since 2019: all 4 bearish crosses above the cloud were followed by a rise. The five Ichimoku lines and 9/26/52 settings.
Pivot Point Indicator: Formulas for 5 Versions and How Often R1 and S1 Get TouchedStandard, Fibonacci, Woodie, Camarilla and DeMark pivots on one real day, and how often price touched R1 (54.7%) and S1 (43.6%) on the S&P 500 ETF.
Williams Fractal Indicator: The Five-Bar Rule, the Two-Bar Delay and a Bitcoin ExampleWilliams fractals mark a high or low with two weaker bars on each side: the five-bar rule, why they appear two bars late, and how Williams filters them.
Trendlines: What They Are, How to Draw Them and How to Trade a BreakHow to draw a trendline by rule, why linear and log charts broke the same Bitcoin line nine days apart, and how to trade a break without chasing wicks.
VWAP Indicator: How the Volume Weighted Average Price Is Calculated, Why It Resets Each Session, and What It Did on Hourly BitcoinVWAP resets each session, so on a daily bar it is just the typical price. The formula, a worked example, and how hourly Bitcoin moved around it in 25 days.