The asset has already flown, and you are just going to go in - and fall exactly into the pullback.
Entry near the end of a move
The scale is already going out, and you just come in: the cooling of the market is at your expense.
Scale check
Six oscillators are assembled into one sensor: you can see whether the market will overheat or there is still a power reserve.
Oscillators show overheating, the moment when the movement has gone far and the market can turn. It's dangerous to use one oscillator, it gives a lot of false signals, and you can't track them all at once. The scale at the bottom of the indicator reduces the six most popular - RSI, Stochastic RSI, Stochastic, MFI, CCI and Momentum - into one simple strip.
Green shows overheating in favor of buyers and bull power, red shows overheating in favor of sellers and bear strength, and brightness tells you how much overheating is happening. The rule is simple: open a trade when the overheating is just beginning to appear, and record when the scale starts to go out. The more oscillators that go into overheating at the same time, the more reliable the signal.
Updated: · Midas Team
How the overbought and oversold scale appears
Oscillators help you determine overheating, the moment when the movement has gone far and the market can turn around. It's dangerous to use one oscillator, because there will be many false signals, and you can't keep track of them all at once.
The simple scale at the bottom of the indicator conveniently shows the level of overheating at once for the six most popular oscillators: RSI, Stochastic RSI, Stochastic, MFI, CCI and Momentum.
- The green color shows the overheating in favor of buyers and the strength of bulls.
- The red color shows the overheating in favor of sellers and the strength of bears.
- The brightness of the color indicates the degree of overheating: the brighter the color, the more the market will overheat.
How to use the overheat scale
Oscillators in the usual form to analyze difficult and long, and the scale of overheating is very simple.
- Go long on green: open a trade when green overheating begins to appear on the panel, and take profit when the green scale begins to disappear.
- Go short on red: open a trade when red overheating begins to appear on the panel, and take profit when the red scale begins to disappear.
When the oscillators overheat one by one, they're almost always false signals, which is why you use a complex of six, and when all six go into green overheating together, you're more likely to continue growing.
The reverse also applies: when many oscillators leave the green zone at once, this is a reason to close the long position.
When the six go into red overheating together, the probability of continuing to fall is higher.
Conversely, when many oscillators leave the red zone at once, this is a reason to close the short position.
A disciplined overheat-scale workflow
We use signals and an overheating scale. When the scale goes green overheat, we wait for Buy and open the long. When the scale goes red overheat, we wait for Sell and open the shorts.
The more oscillators that reach an extreme, the stronger the signal. It works best in the trend direction and in sideways markets on higher timeframes; experienced traders may enter earlier without waiting for the signal.
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