Phi Cloud Indicator

Most of the technical analysis indicators works well either in a trending market or in a sideways market. An indicator that works well in a trending market will not perform well during sideways market and vice versa. Historical analysis says that any market will be trending only 20% of their time and will be in a sideways market for 80% of the time. Hence it becomes important to find the nature of the market. The Phi cloud indicator is an attempt to find the direction of the market.

The Phi cloud indicator is used to differentiate between a trending market and a sideways market. This indicator consists of a cloud like that of ichimoku cloud, but the calculation is entirely different from that of Ichimoku indicators. All my indicators have a lot of parameters and must be optimized for different markets (Stocks, Index, Forex and Commodities). So to avoid confusion I will not give the details of how the indicator was developed.

How to trade Phi cloud indicator

Buy-Sell signal,

1. Buy signal is generated when the price moves above the cloud.

2. Sell signal is generated when the price moves below the cloud.


To find the trend,

When the cloud is moving at an angle, then the trend is strong. (Arrow mark in the chart)

When the cloud is flat then the market is trading sideways. (Circle in the chart)

As with other technical analysis indicators and oscillators, this indicator along with other indicators will improve the accuracy of the trading decisions.

Happy Trading

Nilesh's ATR Strategy

The following strategy was contributed by Mr.Nilesh Deshpande from Just Nifty Blog.

The strategy is as follows,

PC-ATR*.80 to PC-ATR*0.50 Buy Zone

PC+ATR*0.50 to PC+ATR*0.80 Sell Zone

where PC is previous day's close.

Bears get weak near PC-ATR*0.50 to PC-ATR*0.75, but get charged up below PC-ATR*0.80 for a target of DH-1.5*ATR

Bulls get weak near PC+ATR*0.50 to PC+ATR*0.75, but get charged up above PC+ATR*0.80 for a target of DL+1.5ATR

where DH & DL are current days High & Low respectively.

Gives out better results when used with ADX for determining whether this is a trending or a sideways market.

Thanks

About Me

Name: Vinod
Place: Chennai
Occupation: Oracle Database Administrator (Oracle RAC Certified Expert)
Interest: Stock Market, Research, Programming.
Qualification: Master of Science in Information Technology (University of Nottingham).

Currently developing my own Technical Analysis indicator and oscillator for trading in Indian Stock Market and Commodities. I will publish my findings in this blog.

Disclaimer

Trading or investing in stocks & commodities is a high risk activity. Any recommendations or calls made herein are for informational purpose only and are not recommendations to any person to buy or sell any securities. The information provided in this blog/website are based on my understanding of Technical Analysis. Readers of this blog/website those who buy or sell securities based on the information in this blog/website are solely responsible for their actions.

The author does not accept any liability for any, direct or indirect, consequential or incidental damages or losses arising out of the use of the information provided in this blog/website. The author may or may not have positions in any of the securities mentioned in this blog/website.