The Power Trend Indicator is a technical indicator that helps traders identify the strength of a trend in the forex market.
It is based on the Moving Average Convergence Divergence (MACD) and is a combination of two different indicators: the Power and the Trend.
The Power Trend Indicator works by comparing the MACD to a signal line and is calculated by subtracting the signal line from the MACD.
When the Power Trend Indicator is positive, it indicates that the market is in an uptrend. The market decline is indicated when the Power Trend Indicator is negative. The closer the Power Trend Indicator is to zero, the weaker the trend.
The Power Trend Indicator is typically displayed as a line graph that is overlaid on the price chart. The line graph will move above or below a centerline, which represents the zero line, to indicate the direction of the trend.
The distance from the centerline indicates the strength of the trend, with greater distances indicating stronger trends. Some traders also use horizontal lines to indicate key levels of support and resistance that can help with setting stop-loss levels.
Buy Signal Generation With Power Trend Indicator
Buy signal generation with the Power Trend Indicator occurs when the indicator line crosses above the zero line and the trend is positive.
This indicates a potential uptrend and a good opportunity to enter a long position. Traders can also look for bullish divergences between the price and the Power Trend Indicator to confirm the buy signal.
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Sell Signal Generation With Power Trend Indicator
When the indicator line passes below the zero line and the trend is down, the Power Trend Indicator generates a sell signal.
This suggests a possible downward trend and a great chance to start a short position. To validate the sell signal, traders can also check for bearish divergences between the price and the Power Trend Indicator.