eSignal 12 - Nirvana Intrinsic Trend Module Quick Start Guide
The Nirvana Intrinsic Trend Module is an add-on package available here.
Getting Started with The Intrinsic Trend Module for eSignal
The Intrinsic Trend Module is designed to give you valuable feedback about the current trend. Its trading bands provide good indications of the range in which price is likely to remain. Bounces off these bands are prime trading candidates, provided the trend is behaving nicely. The idea is to find well-priced entries based on the underlying tendencies of the dominant trend.
The Intrinsic Trend Module contains four studies that help you fully analyze the trending behavior of a symbol. The Intrinsic Trend Study brings you our proprietary price channels and bounce signals, along with a trend dashboard readout that shows the characteristics of the current trend. Three additional studies show you more in-depth details on the state and behavior of the trend.
The Intrinsic Trend Module is designed to give you valuable feedback about the current trend. Its trading bands provide good indications of the range in which price is likely to remain. Bounces off these bands are prime trading candidates, provided the trend is behaving nicely. The idea is to find well-priced entries based on the underlying tendencies of the dominant trend.
The Intrinsic Trend Module contains four studies that help you fully analyze the trending behavior of a symbol. The Intrinsic Trend Study brings you our proprietary price channels and bounce signals, along with a trend dashboard readout that shows the characteristics of the current trend. Three additional studies show you more in-depth details on the state and behavior of the trend.
To get started with the ITM, add the Intrinsic Trend EFS to your chart. This will display the trading bands, bounce signals, and trend statistics in your chart. You are now ready to begin exploring the trend.
By default, the studies plot in green during bullish trends, and red during bearish trends. Trend Changes are marked with a yellow vertical line.
Trading with the ITM
The most popular trend trade to take is a long band bounce trade as price bounces off the lower band in a bullish trend. These action points are signaled by green arrows in the chart, allowing you to easily identify both current and historical instances of these trades.
The most popular trend trade to take is a long band bounce trade as price bounces off the lower band in a bullish trend. These action points are signaled by green arrows in the chart, allowing you to easily identify both current and historical instances of these trades.
figure 1 long bounce signals on starbucks
A similar trade can be taken during bearish trends by looking at points where price is bouncing off the upper band of the bearish channel. These signals are plotted with red arrows.
figure 2 short bounce signal on apple
Trend Detection
The intrinsic trend module uses pivot analysis to identify emerging trends before building out the trading bands. Due to the nature of this methodology, newly detected trends may require a number of additional bars for the bands to stabilize. This is generally easily detected by visual inspection of the chart. As the emerging bands smooth out, you know the module has locked on to the price movements and the bands are ready to be used.
The intrinsic trend module uses pivot analysis to identify emerging trends before building out the trading bands. Due to the nature of this methodology, newly detected trends may require a number of additional bars for the bands to stabilize. This is generally easily detected by visual inspection of the chart. As the emerging bands smooth out, you know the module has locked on to the price movements and the bands are ready to be used.
figure 3 the chart of disney showing early trend variability before later stabilizing.
Using the Additional Studies
The Strength, Slope, and Quality Studies give you a way to quickly evaluate various aspects of the current trend. Each of these calculations gives you a particular insight into the expected behavior in the chart.
The Strength Study helps you understand how much pullback is seen within the current trend. This allows you to know whether a test of the band is likely. For example when an uptrending stock has very high strength, it is predominantly trading above the intrinsic trend centerline, making a move back to the lower band very unlikely. In this scenario, you might revert to trading bounces off the centerline instead of the lower band.
figure 4 intrinsic trend strength study on sbux
the slope study tells you how steep the current trend is, measured in annual percentage return. this helps relate the rate of return of trend to commonly seen rates of return for comparison purposes. a common goal of slope analysis is to detect overheated trends or trends that are too weak to engage. for example if you saw a trending utility stock with an annual rate of return in excess of 100%, the sustainability of that trend would be highly suspect.
figure 5 intrinsic trend slope study on csco.
The Quality Study shows you how well the current bands “fit” the current trend. Trends which have frequent or large counter trend moves outside their bands will have lower quality than those which honor the levels. The quality gives you perspective on how to interpret a test of the band in the given situation. Bounces from stocks with lower quality would be more suspect.
figure 6 intrinsic trend quality study on dis