Understanding trend movement is essential to trading success because trending is an important trading concept that indicates the direction of an asset's price within a given interval. The asset price's directional bias and volatility are shown by the Median indicator, a trend-based technical indicator.
The price volatility is represented by parallel bands derived from the average true range value in the Median indicator, which consists of a channel formed from the ATR value and the middle of the range within a given period.
The Median indicator works by comparing the median value between relevant peak swing points (peak highs and lows) within a given interval to an EMA of the same period. The difference between the median value and the EMA value is shown by a colored cloud depending on which line has a higher value.
The median indicator's colored cloud scheme identifies the current trend and generates potential trade signals, making it relatively simple for investors and traders to use.
When the median value is higher than the EMA value, the Median indicator color scheme depicts the directional sentiment of market participants. A green coloration indicates an uptrend, which indicates that buyers are in control of price.
When the EMA value is higher than the median value, a purple coloration appears, indicating a downtrend and the presence of sellers in charge of price movement.