What is the Supertrend indicator?
SuperTrend is a popular technical analysis indicator used in financial trading to identify the trend direction and potential reversal points in the market. It is a trend-following indicator that helps traders to determine the entry and exit points for their trades.
The SuperTrend indicator is calculated using the average true range (ATR) and the price action. The ATR is used to measure the volatility of the market, while the price action is used to determine the trend direction. The SuperTrend indicator consists of two lines: the upper line and the lower line.
The upper line is calculated by adding two times the ATR to the moving average of the high price, while the lower line is calculated by subtracting two times the ATR from the moving average of the low price. The resulting lines form a band around the price chart that can be used to identify potential support and resistance levels.
When the price is above the SuperTrend band, it is considered to be in an uptrend, and traders may look for opportunities to enter long positions. When the price is below the SuperTrend band, it is considered to be in a downtrend, and traders may look for opportunities to enter short positions. The SuperTrend indicator can also help traders to identify potential trend reversals when the price crosses over the SuperTrend band.
Like all technical indicators, the SuperTrend should be used in conjunction with other tools and analysis to make informed trading decisions. It is important to note that no indicator can predict future price movements with complete accuracy, and traders should always manage their risk and use proper money management techniques when trading.
Supertrend Indicator Formula
The supertrend indicator calculation is shown below–
Up = (high + low / 2 + multiplier x ATR
Down = (high + low) / 2 – multiplier x ATR
Calculation of Average True Range –
[(Prior ATR x 13) + Current TR] / 14
Here, 14 indicates a period. Hence, the ATR is derived by multiplying the previous ATR with 13. Add the latest TR and divide it by period.
Thus, ATR plays an important role in the supertrend technical analysis indicator.
What is Double Supertrend
The Double SuperTrend is a technical analysis indicator that is an extension of the original SuperTrend indicator. Like the SuperTrend, the Double SuperTrend is a trend-following indicator that helps traders to identify the direction of the trend and potential entry and exit points.
The Double SuperTrend is calculated using two SuperTrend indicators with different parameters. The first SuperTrend indicator is used to identify the short-term trend, while the second SuperTrend indicator is used to identify the medium-term trend.
The short-term SuperTrend is calculated using a lower multiplier and a shorter period, while the medium-term SuperTrend is calculated using a higher multiplier and a longer period. The resulting lines form a band around the price chart that can be used to identify potential support and resistance levels.
What is Triple Supertrend
Triple SuperTrend is a technical analysis indicator that is an extension of the Double SuperTrend and the original SuperTrend indicators. The Triple SuperTrend is used to identify the direction of the trend and potential entry and exit points, like its predecessors.
The Triple SuperTrend indicator uses three SuperTrend indicators with different parameters to create a band around the price chart that can be used to identify potential support and resistance levels. The first SuperTrend indicator is used to identify the short-term trend, the second SuperTrend indicator is used to identify the medium-term trend, and the third SuperTrend indicator is used to identify the long-term trend.
Each SuperTrend indicator is calculated using a different multiplier and period length, with the short-term SuperTrend using a lower multiplier and shorter period length than the medium-term SuperTrend, and the medium-term SuperTrend using a lower multiplier and shorter period length than the long-term SuperTrend.
Traders can use the Triple SuperTrend to identify potential buy and sell signals based on the intersection of the short-term, medium-term, and long-term SuperTrend lines. When all three SuperTrend lines are aligned in the same direction, it is considered a strong buy or sell signal, depending on the direction of the trend.
