Combining the best of Price Action, Directional Movement, along with Divergence/Convergence analysis, Candle Color Trend is an easy and reliable way to identify trend direction. The index automatically paints the candles based on the assumption that an uptrend is characterized by costs that form a series of higher highs and higher extremities. In contrast, a downtrend is defined by prices that form a series of lower highs and lower lows. Additionally, ADX Wilder indicator is used to measure trend weakness (consolidation), and a proprietary algorithm based on MACD has been implemented to identify a potential reversion ahead. each one of those scenarios is identified by a color that can be chosen according to your preference.

Candle Color Trend is surely be one of the best filters for your trend following strategy, but it is not recommended to be used as a standalone entry signal. For Expert Advisors, the buffer number 9 can be used. Values higher than 1 and lower than -1 mean up trend and down trend respectively. Potential reversion is set as 1 or -1, and finally, 0 is used for consolidation.

• ZigZag depth – The number of bars to be considered between highs and Lows, and it is related to the duration of the trend. Try different timeframes before altering this setting.
• ADX Period – Period to be applied on ADX Wilder indicator in order to identify consolidations.