When the Lower (RED) component is above the Upper (BLUE) component it signals a bullish trend. Likewise, when the Upper (BLUE) component is above the Lower (RED) component it signals a bearish trend. Traders should avoid trading against the trend. The Center (YELLOW) trend provides a guideline to the price movement. When the Center trend is between the Upper and Lower trends it implies a continuation of the trend. When the Center trend deviates outside the Upper and Lower trend it signals the end of a trend and the probability of a trend reversal is very high. The Center trend is the Simple Moving Average (SMA) of the Close over the recent CHANNEL_PERIOD candles. The Upper trend is calculated from the cumulative sum of the High and difference between the High and Close over the CHANNEL_PERIOD. Likewise, the Lower trend is calculated from the cumulative sum of the Low and the difference between the Low and Close over the CHANNEL_PERIOD.
One of the main advantages of the iDoubleChannel indicator over other indicators is that it reduces the lag.
BUY / EXIT SHORT - Enter LONG (or exit SHORT) when the BUY arrow is displayed and the RED (Upper) component of the iDoubleChannel indicator is above the BLUE (Lower) component of the indicator. Place the stop-loss below the nearest Swing Low. It is recommended to employ a trailing stop when the trade turns profitable.
SHORT / EXIT LONG - Enter SHORT (or exit LONG) when the SELL arrow is displayed and the BLUE (Upper) component of the iDoubleChannel indicator is above the RED (Lower) component of the indicator. Please the stop-loss above the nearest Swing High. It is recommended to employ a trailing stop when the trade turns profitable.