Absolute Strength Histogram

Absolute Strength Histogram is a trend following indicator which gives an indication of the strength of the trend.
This trading system includes Dual Absolute strength Histogram,
one for the shorter term trend and one for the longer period trend. This system helps traders to trade pullback trades. Let’s try to understand the working of the system with a few examples.

Absolute-Strength-Histogram Overview

Absolute Strength Histogram 1

Absolute-Strength-Histogram shows not only who has control over the market but also their magnitude of strength and provides an accurate indication of the trend and strength of the trend. This histogram is based on the moving average of the price data. When the green line moves above the Red line then, the indicator display Green bars of different heights  & When the red line moves above the green line then, the indicator display red bars of different heights. The height of the Bars depends on the speed of the trend. During the fast trend, this indicator plot big bars compared to the range-bound market. The trend is up and when Green line moves above the red line then and the trend is down when Red line moves above the green line.

Absolute-Strength-Histogram Anatomy

Absolute Strength Histogram 2

Dual Indicator is used in this trading system, which provide filter from poor signals. When green line is above the red line  on both of the indicators then it means long term traders and short term traders, both are bullish on the market. This time traders should look for only long trades and avoid taking short entries.
When Red line is above the Green line on both of the indicators then it means long term traders and short term traders, both are bearish on the market. This time traders should look for only short trades and avoid taking long entries.

Also Read: RoboForex Review – Get $30 Welcome Bonus

Absolute-Strength-Histogram :Buy Conditions

Absolute Strength Histogram 3
  • Price forming higher high and higher low structure.
  • Green Line is above the Red line and histogram is Green.
  • Trader can hold the long trades till the time above conditions satisfy.

Absolute-Strength-Histogram : Sell Conditions

Absolute Strength Histogram Sell
  • Price forming lower high and lower low structure.
  • Red Line is above the Green line and histogram is Green.
  • Trader can hold the Short trades till the time above conditions satisfy.

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I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

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