A rainbow pattern overview
A rainbow pattern on the Binomo platform is a graphical pattern that is based on three EMAs (exponential moving averages) with distinct periods. To make the picture transparent, they all should have different colours.
Go to the chart preferences feature and choose the Moving Average. Set the period for 6, choose the type of the moving average which will be “Exponential” in this case and select the blue colour. The last thing to do is to click the “Apply” button.
Repeat the procedure for two more exponential moving averages. The second time the period should be set for 14 and the colour yellow, the third time the period 26 and the colour red.
The signals received from the rainbow pattern on the Binomo platform
The signals to open a sell position
There are three EMAs in the rainbow pattern. You must observe the indicators’ lines and wait for a favourable situation to occur. What is a favourable situation?
During the uptrend, the blue EMA6 should move over the rest of the indicators. Underneath should be the yellow EMA14 and at the bottom the red EMA26.
Now, you are waiting for the intersection of the lines. The blue EMA6 should cross the yellow EMA14 from above and continue downwards. This is a signal to enter a sell position.
The signals to open a buy position
In the opposite situation that is when the blue EMA6 is at the bottom, the yellow EMA14 above it and the red EMA26 on top the price increase is expected.
The signal to enter the trade occurs when the blue EMA6 crosses the yellow EMA14 from below and continues over it. This is the time you should open a buy position.
The rainbow pattern consists of three exponential moving averages with different periods and colours. It is not difficult to apply. You just need to wait for a crossover of the EMA6 with the EMA14. Like always in the trading business, patience is very important. You have to wait until the signal occurs and enter the market at the right moment. Rushing in is not a good idea. Watch carefully the lines of the indicators and wait patiently for a favourable situation to happen.
You may be interested in reading the guide about the strategy that uses the Simple Moving Average.
Leave the comments on the rainbow pattern below.
Best of luck!
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?
Download this article as PDF. (English)Enter your Email Address