Understanding Signals

Color Coding & Candle Colors.

Base Colors

Now we have explained the basic mechanism to acquire higher probability trades using Crayons, and isolated some false positives, let’s talk about color coding or candle color meanings and label definitions.

First of all there is three trend colors for three distinct market conditions directions - trend up, trend down, and range bound consolidation also known as sideways or chop.

These are basic color codings and we refer to them as base colors.

Deterministic Factors

  1. If the SC signal bias is correct and strong by confirming its direction with complimentary color after it, or an alert that the market is still in an opposing trend by printing the opposite bias color, it can be also used to mark no trade zones and extreme chop conditions in cases when we get all three colors mashed in a chain like manner.

  2. It helps traders to keep their position longer and not to exit prematurely, which is a common problem for traders especially newer ones.

  3. Points to and helps depict overall market sentiment.

Last updated