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 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
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.
I have been actively trading the financial markets since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund that has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.
Risk Warning: Trading in the forex market is very risky. Thus, it is may not be for everyone. A highly leveraged position can work against the trader when the trade does not work as expected. Trading in the forex market can cause to lose a significant portion of the capital or all of the capital. It is crucial to learn about the trading and gain enough experience in the demo account before trading with real money. The trading strategies published on this website do not guarantee profit as the market is dynamic and unpredictable. The past performance of a strategy is not the indicative of future performance. Trend Following System will not accept any kind of liability or damage caused by trading the strategies published on this website.
