Overheated by 6 oscillators
Visualizes market condition, showing degrees of overbought and oversold👇
Labeling on the chart
Oscillators help determine the state of overbought or oversold market, where the market is highly overheated and may reverse.
Using a single oscillator is dangerous - there will be many false signals, and monitoring them all is impossible!
A simple-to-understand scale at the very bottom of the indicator conveniently shows the level of overheating across 6 most popular indicators at once - RSI, StochasticRSI, Stochastic, MFI, CCI, Momentum:
Green color - indicates the asset is overbought and the strength of the bulls
Red color - indicates the asset is oversold and the strength of the bears
Color brightness - indicates the degree of overheating (the brighter the color, the more overheated the price)
Application in trading
Oscillators in their usual form are difficult and time-consuming to analyze, while the overheating scale is very simple:
"Long the green" - open a trade when overbought starts to appear on the panel; close it when the green scale begins to disappear
"Short the red" - open a trade when oversold starts to appear on the panel; close it when the red scale begins to disappear
First of all try the simplest trading strategy based on oscillator overheating from the indicator developer
In the example we see:
-when oscillators go into overheating individually - these are almost always false signals, which is why we use a set of 6
-when oscillators go into overbought together - this is a fairly accurate signal to buy
Also, when oscillators massively exit from overbought - this is a signal to sell.
In the example we see:
-when oscillators go into overheating individually - these are almost always false signals, which is why we use a set of 6
-when oscillators go into oversold together - this is a fairly accurate signal to sell
Also, when oscillators massively exit from oversoldness - this is a signal to buying.
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