Rainbow Trend [Mc]

1. Momentum-Based Foundation

• This indicator measures the velocity and strength of price changes.
  
• Rising momentum indicates that price movement (upward or downward) has strength behind it.
  
• When momentum weakens or reverses, it often signals a potential trend reversal.
  

2. Long-Term Time Frame

• Unlike traditional indicators like RSI or Stochastic, which use shorter lookback periods (e.g., 14 days), this indicator uses a much longer period, such as 50 to 200 days.
  
• This extended range helps smooth out volatility and provides a clearer view of the primary trend.
  

3. Multicolored Gradient Lines

• The indicator displays multi-layered colored curves, often with a rainbow-like gradient.
  
• Red or pink areas indicate strong selling pressure or peak momentum in an uptrend.
  
• Green or bright green dots often suggest recovery or bottoming momentum.
  
• Orange or yellow colors indicate neutral or transition zones, awaiting trend confirmation.
  

4. Horizontal Levels (Overbought/Oversold Zones)

• The chart includes reference levels such as +160, 0, -40, and -120 (as shown in the image).
  
• These levels help identify when momentum is reaching overbought or oversold conditions.
  
• Reversals often begin near the upper or lower extremes of these zones.
  

5. Reversal Signal Markers

• Red dots at the top indicate extreme bullish momentum and potential topping zones.
  
• Green dots at the bottom suggest oversold conditions and potential bullish reversals.