Trend is all you need: A simple indicator that everyone can use!!!

Keep buying the dip, but only to see the stock fall further? Find it hard to pinpoint the right entry and exit points?

Look no further! Here’s a straightforward yet powerful indicator that is often overlooked by many investors. Mastering this tool will arm you with a basic framework for analyzing stock price trends and help you make more informed trading decisions!

The following part is divided into four sections
1. Introduction: The Role of Trend Analysis in Stock Trading
2. Step-by-Step Guide: Implementing the Indicator
3. Component Breakdown and Instruction
4. Practical Application

While this article may seem long, it's packed with invaluable insights. Take the time to read it carefully, and you will elevate your trading skills to the next level.

1. Introduction
We pay close attention to trends because they are a fundamental aspect of stock trading. As Charles H. Dow famously stated, "Trends exist until definitive signals prove that they have ended." This means that once a stock sets an upward or downward trend, it is likely to persist for a significant duration until a specific "signal" suggests a change. Historical data backs up this perspective:

Therefore, as stock traders, our primary objective should be to purchase stocks as they transition into an upward trend (often referred to as "bottom fishing") and to sell them as they begin to shift into a downward trend (commonly known as "escaping the top"). This concept is quite straightforward and easy to grasp.

However, determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Often, we observe minor pullbacks within an upward trend or minor rebounds within a downward trend. How can we ascertain if this is the start of a new trend or just a brief movement within the existing one? This is always a challenging question.

But, don't worry, here comes the DKW indicator! By combining multiple indicators and candlestick patterns, such as EMA, KDJ, and T.D. Sequential, it can help us to:
1. Determine the current trend
2. Predict trend reversals, especially the transition to an upward trend

2. Step-by-Step Guide
How to use DKW indicator in Moomoo? Here is a 3 min guide for you.
Step 1: Open Moo on PC and choose a stock (here I take Nvidia as an example）
Step 2: Enter the lower right corner of the stock page-Indicator Management
Step 3: Click "New tab" and refer to the picture below to add a DKW indicator

You can copy the following code directly to fill in the code box
(Adding custom indicators can only be done on a PC. If you have automatic translation enabled, please turn it off before copying and pasting)

TF := 13;{PERIOD OF 13}
UP := EMA(H, TF);
DW := EMA(L, TF);
F1 := C > O AND (O > UP OR C < DW); F2 := C < O AND (O < DW OR C > UP); COND := F1 OR F2;
COND1 := UP > REF(UP, 1) AND DW > REF(DW, 1);
COND2 := UP < REF(UP, 1) AND DW < REF(DW, 1);
COND3 := NOT(COND1 OR COND2);
A: UP, COLOR2896FF;
IF(COND1, A, DRAWNULL), COLOR80FF80;
IF(COND2, A, DRAWNULL), COLORFF80C0;
B: DW, COLOR2896FF;
IF(COND1, B, DRAWNULL), COLOR80FF80;
IF(COND2, B, DRAWNULL), COLORFF80C0;
STICKLINE(COND AND COND1, A, B, 0.2, 0), COLOR80FF80;
STICKLINE(COND AND COND2, A, B, 0.2, 0), COLORFF80C0;
STICKLINE(COND AND COND3, A, B, 0.2, 0), COLOR2896FF;
RSV:=(CLOSE-LLV(LOW,14))/(HHV(HIGH,14)-LLV(LOW,14))*100; K:=SMA(RSV,3,1);
D:=SMA(K,3,1);
J:=3*K-2*D; STICKLINE(J>100,O,C,0.9,0),COLORYELLOW; STICKLINE(J>100,L,H,0.2,0),COLORYELLOW;
STICKLINE(J<20,O,C,0.9,0),COLORWHITE; STICKLINE(J<20,L,H,0.2,0),COLORWHITE;
STICKLINE(CROSS(J,30),O,C,1,0),COLORLIBLUE;
STICKLINE(CROSS(J,30),L,H,0.2,0),COLORLIBLUE;
A1:=C>REF(C,4); NT:=BARSLASTCOUNT(A1);
TJ11:=NT=9;
TJ13:=ISLASTBAR AND BETWEEN(NT,5,8);
AY:=(BACKSET(TJ11>0,9) OR BACKSET(TJ13>0,NT)) * NT;
DRAWNUMBER((AY > 0 AND AY < 9), H * 1.007, AY ), COLORGREEN;
DRAWNUMBER(NT = 9, H * 1.007, 9 ), COLORFF00FF;
B1:=C<REF(C,4);
NT0:=BARSLASTCOUNT(B1);
TJ21:=NT0=9 ;
TJ23:=ISLASTBAR AND BETWEEN(NT0,0,8);
AY1:=(BACKSET(TJ21>0,9) OR BACKSET(TJ23>0,NT0))*NT0;
DRAWNUMBER((AY1 > 0 AND AY1 < 9), L, AY1, 0, -1*15), COLORFF00FF;
DRAWNUMBER(NT0 = 9, L, 9, 0, -1*15), COLORGREEN;
HLAFENTITY:=ABS(O-C)/2+MIN(O,C);
AA:=BARSLAST(NT0=9);
DOWNGAP:=H<REF(L,1);
BB:=AA>=0 AND AA<=15 AND DOWNGAP; STICKLINE(BB,REF(L,1),H,0.75,1),COLORWHITE;
CC:=BARSLAST(BB);
DD:=CC>=1 AND CC<=3 AND H>REF(L,CC+1) AND C>O;
DRAWICON(DD AND NOT(REF(DD,1)) AND NOT(REF(DD,2)),L*0.975,5);
STICKLINE(DD AND NOT(REF(DD,1)) AND NOT(REF(DD,2)),O,C,0.75,0),COLORMAGENTA;
DRAWTEXT(DD AND NOT(REF(DD,1)) AND NOT(REF(DD,2)),L,' -------------'),COLORLIGRAY;

3. Component Breakdown and Instruction
Before using the DKW Indicator, it's beneficial to spend just 5 minutes to gain a basic understanding of its specific components and functions. Trust me, this process is straightforward and doesn’t involve any programming. By reading the following content thoroughly, your ability to determine trends will surpass 90% of other mooers.

Part I: EMA
EMA, or Exponential Moving Averages, are designed to see price trends over specific time frames. In the DKW indicator, changes in EMA can be visualized through the pink/green ladders.
· A pink ladder indicates that the EMA is decreasing day by day, signifying a downward trend
· A green ladder indicates that the EMA is increasing day by day, signifying an upward trend
It is important to note that only a complete ladder can confirm a trend. You may notice that in some places, a "vertical line" is missing; that is not the basis for our trend determination.

Part III: A simple T.D. Sequential
The T.D. Sequential is a powerful technical analysis tool designed to identify the exact time of trend exhaustion and potential price reversals. It's basically a psychological finding, but you don't need to know how it works, just know it's a really powerful tool for all of us.

How to use it? Be sure to remember that when the number 9 appears, it may be a signal for a trend change, as shown in the chart below. We can see that three consecutive number 9 successfully predicted the peaks and troughs of the stock price.

Part IV: Three Day Gap Fill
If a downward gap occurs (the current high is lower than the previous candlestick's low) and this gap is filled within three days, it indicates that the market considers the downward gap to be an overreaction. Therefore, we can interpret this as a bullish pattern. In the DKW indicator, this candlestick pattern is represented by a pink bar accompanied by a 😊 icon.

Remember to ❤️ and follow me to get more profitable information! Leave a comment below if you have any questions and please let me know if it is useful.

Peace.