Trading

How to use Market Cipher

Cipher A

Green Dot

The Green Dot on Market Cipher A is a bullish indicator and is most reliable on a 6-hour time period and higher. This indicator normally follows a Blue Triangle and should be interpreted over a range of 1 – 3 candles. Normally a breakout is probable when the next 1 – 3 candles print a Yellow Diamond. If the next 1 – 3 candles print a Red Diamond the breakout is less likely.

Yellow and Red Diamonds

Yellow and Red Diamonds are trend strength indicators. Yellow indicates bullish continuation while the red indicates a trend may be weakening. These indicators should be used together with the EMA ribbons giving a further indication to trend direction.
Consideration should be given to the color and band separation of the ribbons.

Red X

The Red X is a Bearish indicator. This indicator is used together with the EMA Ribbons and the Red Diamond indicator. The most effective usage of the Red X is when it follows the printing of a Red Diamond and the EMA Ribbons are nearly fully constricted changing to the bearish gray color. The accuracy of this indicator varies with time period.

Yellow X

The Yellow X is a bearish indicator and is intended to indicate high volume long covering that is rapidly bought up and sold short. This market condition also presents a possible opportunity for whale traders to exaggerate the condition by manipulating the rate of buyback indicating a possible bottom or reversal to breakout traders. This in turn supplies local liquidity then the whales reverse position forcing the market lower. The Yellow X is most reliable on 1 hour and above time periods.

Blue Triangle

The Blue Triangle is a trend reversal indicator that indicates a possible reversal of the previous trend. This indicator is intended as an early warning that the trend momentum is decreasing, and a reversal is near. The Blue Triangle should be used together with the other indicators of Market Cipher A to provide further confirmation.

Blood Diamond

The Blood Diamond is a Bearish indicator. This indicator is used together with the EMA Ribbons and the Yellow and Red Diamond indications. The most effective usage of the Blood Diamond is when it follows the printing of a Yellow Diamond and the current candle is printing a Red X and Blood Diamond stacked. Additional confirmation can be obtained from the EMA ribbons if they are constricting trending down. The accuracy of this indicator is greater on the 1 hour and above time period.

Green Dot

The Green Dot on Market Cipher A is a bullish indicator and is most reliable on a 6-hour time period and higher. This indicator normally follows a Blue Triangle and should be interpreted over a range of 1 – 3 candles. Normally a breakout is probable when the next 1 – 3 candles print a Yellow Diamond. If the next 1 – 3 candles print a Red Diamond the breakout is less likely.

EMA Ribbon

The EMA Ribbon indicator is a group of exponential moving averages of different lengths. They are used to determine the strength of a trend by looking at the distance between the moving averages. They can be used to identify key areas of support or
resistance by looking at the price in relation to the ribbon. The ribbons can also be used to signal potential trend changes when the price moves through the ribbons or the ribbons cross each other. When the ribbons are blue and white the trend is bullish. When gray the trend is bearish.

Cipher B

Money Flow Wave (Green/Red)

The Money Flow Wave is a momentum indicator and its intent is to display the market condition based on the flow of money into and out of the market. The wave range travels between 100 and -100. Green indicates money flowing in and red indicates money flowing out. The Money Flow Wave can also be used to confirm other indicators that are built into Market Cipher B. Positive results have been found on all time periods.

Momentum Wave (Blue)

The Momentum Waves are used to measure and visually display the strength and direction of an asset. Market Cipher B breaks momentum down into two waves. The light blue wave is intended to display momentum as a leading wave and the blue wave displays momentum as a lagging wave. ay overlaying the two, this helps to show when an assets strength is increasing (oversold) or when its nearing exhaustion (overbought). Momentum Waves can also be used to easily spot divergent price action.

VWAP Momentum Wave (Yellow)

The VWAP Momentum Wave is not the same as the traditional VWAP (volume weighted average price) indicator as used in Market Cipher SR. This indicator is intended to simulate some aspects of the traditional VWAP but is based on momentum. This indicator should be used in conjunction and confirmed with other Market Cipher B indicators. Success has been found longing when the wave crosses over zero and shorting when the wave crosses under zero. This is the opposite of the tradition VWAP whereas a rule you only short above VWAP and long when below.

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