Last Thursday, the red line dropped to 6.46 after it spiked to 21.43, that's when a signal to buy was given. Updated chart attached as of EOD yesterday.
1. The blue line is useless - I do not see an correlation to the price movement 2. The red line has big spikes at the bottoms of corrections, however it is quite choppy and in reality it is difficult to say whether the current spike will mark s support 3. Nothing to indicate beginning of a correction down. let's take at other indicators like Stochastics, Advance/Decline Oscillator and Money Flow Oscillator applied to SPX on the same timeframe - red vertical lines signals to sell and green vertical lines are signals to buy: 1. Advance Decline 2. Stochastics 3. Money Flow It would be nice you explain what makes your indicators different and why it is unique. I know that Stochastics shows how far from the most recent highs and lows the price moves. With Advance/Decline Oscillator I know that it shows whether majority of stocks from the SPX are in green or they are in red. With Money Flow I see whether traders are selling or buying stocks listed in the SPX. For me, your chart is only a set of lines. A traders needs to know what is behind the lines in order to be able to analyse lines and make good decision.
=============== User 8 Well you may want to grow with the green line, on your chart; it reminds me of a price trend. Even If its not a price trend, you may want to sudy price trends; green or red trends. Wisdom is profitable to direct.
The green line is spx. I started a new thread here: http://elitetrader.com/vb/showthread.php?t=280622 in case you are interested. Backtest results can be seen here: http://elitetrader.com/vb/showthread.php?t=280622&page=2 Based on the indicators, I already flipped to the short side. Thanks.