09-30-2019, 05:13 AM
To identify a trend, we would be using a couple of rules. First, the Rainbow MA should be in agreement with the intermediate trend, the 50-period Exponential Moving Average (EMA). It should be on the correct side of the 50 EMA. Then, price should be pulling away from the Rainbow MA to the direction of the trend. Lastly, as price pulls away, the Rainbow MA would have a tendency to fan out, so it should be fanning out wide enough. Then we wait for the pullback.During a slowly chugging trending market condition, the returns would be smaller. The reward-risk ratio might suffer a bit, but you could be having several entries available. You could milk these trends for several entries, getting in and out as the market slowly moves to the direction of the trend. However, you should also get a feel as to when the last entry could be. Trends could last for three to five entries during these scenarios, sometimes even more.