Theory:
Have you ever heard of John Ehlers? He introduced the bandpass filter, which you can check out here. This nifty tool helps traders calculate what we like to call a "market mode." Essentially, it averages out the peaks and valleys, and depending on whether the bandpass filter sits above or below these levels, we can identify the market mode relative to those benchmarks. This particular version, however, takes a different route by using discontinued signal lines to highlight significant levels instead.
Usage:
One of the simplest ways to interpret this indicator is by watching the color changes. These shifts serve as signals to guide your trading decisions.
Comments 0