Momentum Ribbon
Alpha Trend price bands and how they may be applied to varying types of traders.
Last updated
Alpha Trend price bands and how they may be applied to varying types of traders.
Last updated
Price momentum bands have been used to help identify the probable range associated with immediate price action. BirbicatorPRO has developed custom momentum bands that are similar to Bollinger Bands, but utilize the Average True Range (ATR) as well as standard deviations.
Alpha Trend Ribbons are colored to match the sentiment of the trend. The "High Band Level" is set to the same color as Resistance, and the "Low Band Level" is set to the same color as Support. During periods of price rising or falling beyond the band level, the band will adjust to match the trend of price.
Ribbon indicators are historically used to provide support and resistance levels for each candle created within a chart. The benefit of using such systems is providing traders with a focus on the trading range of an asset that will likely manifest within a period of time. Ribbons can be used in various systems to help plan trades, define risk of those trades, and measure volatility as the bands higher and lower extremes converge or diverge from one another (e.g., "squeezing of the bands").
Alpha Trend has a band that is anchored to the HMA. This provides support and resistance levels that are stable across higher timeframe charts (such as 1-Day), as well as lower timeframe charts (such as sub 15-minute charts).
In addition to the array of tools available within Alpha Trend to ascertain confluence of the state of trend, the momentum ribbon provide a contrarian viewpoint of the market and allow users to make trading decisions (entry, exit, take-profit) when price is crossing the bands to the up or downside.