📈 Indicators·intermediate

Supertrend

A trend-following indicator based on ATR that plots a single line above or below price — line below means uptrend, above means downtrend.

Supertrend is a popular modern trend indicator built on ATR. It plots a single line that flips between being above and below price. When price is above the line, the line is GREEN and below price (acting as support). When price is below the line, the line is RED and above price (acting as resistance). The flip from one side to the other is the trade signal. The inputs are ATR period (default 10) and multiplier (default 3). The line sits at multiplier × ATR away from price. Higher multipliers mean fewer signals but bigger trends. Lower multipliers mean more signals but more chop. Supertrend is loved because of its simplicity — one line, two colors, clear signals. It's also a built-in trailing stop. The downside, like all trend indicators, is whipsaw in ranging markets.

Real trade example

USD/JPY's daily Supertrend stayed green from January to July 2024 — the line never flipped during the entire 2,000-pip rally. A simple Supertrend exit would have caught most of the move.

Related terms

ATR (Average True Range)

intermediate

An indicator that measures average price volatility over a set period — used to size stops and position sizes.

Moving Average

beginner

A smoothed line showing the average price over a recent period — the most-used indicator in technical analysis.

Parabolic SAR

intermediate

A trend-following indicator that plots dots above or below price — used to set trailing stops and identify trend direction.

Trailing Stop

intermediate

A stop loss that automatically moves in your favor as price moves — locks in profit while letting winners run.

Death Cross

beginner

When a short-term moving average (typically 50-day) crosses BELOW a long-term moving average (typically 200-day) — a major bearish signal.

Divergence

intermediate

When price moves in one direction but a momentum indicator moves in the opposite direction — a warning of trend exhaustion.

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