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Track 'n Trade Bulls 'n Bears Trading System
Using the Ribbon Indicator
Video Transcript
In this Track 'n Trade Trading Training video, I want to take you through, and I want to talk to you a little bit about the Bulls 'n Bears new Ribbon Indicator.
The ribbon indicator is a filtering system that's designed to help us filter out some of the less profitable signals given to us by the Bulls 'n Bears. What it does is it helps us actually read the trend, on a longer term basis. It help us give us some kind of an early signal or confirmation signal, that the market is going to continue in the overall trend, or if it's a great time to be getting into or entering this market.
I want to go through and just talk about several steps that we look at while we look at and analyze the ribbon indicator, in conjunction with the Bulls 'n Bears. Of course, the Bulls 'n Bears being the tool that turns the Price Bars red, yellow, and green. Yellow being the neutral time zones, right here. Green, of course, being a nice long uptrend. Again, yellow going neutral. Then, red, of course, this is our downtrend.
We're going to go through and look at that combination of color change over, in relationship to the ribbon indicator.
The first thing I want to talk about is the short-term retracements given by the ribbon indicator, as an entry signal, or going long. What we do, is we come in here, you'll notice that with the Bulls 'n Bears, we get our Buy Signal right in here. The color change over from yellow, to green, that's our Buy Signal. The ribbon indicator, as you can see, is coming down and making the change over, to confirm the Bulls 'n Bears change over, itself. Here's where you start seeing an idea that the market is starting to change. See, how the, the very first, or the fastest moving average is beginning to cross-over the second moving average. This is an early entry look, that gives us the idea that we need to start preparing for the changeover, from Neutral to Bullish. As the market progresses, we look for a continuation of that type of a cross over pattern.
The next thing we want to look for is another short term retracement. You'll notice, that once the ribbon indicator crosses over and begins to actually fold over on top of itself, it will begin to retrace a little bit. This is where you start to see a pullback. We know markets move in waves, two steps forward, one step back, two steps forward, one step back. As the market starts to pull back, you'll notice that the ribbon, the shorter term ribbon indicator will start to move with that movement of the market. But you'll notice that the longer term averages are staying more steady. They're steady and they're longer term look at the view of the market. We use these as a combination, one with the other.
Let's go on, the next thing we look for is a moving average diverge... as moving averages diverge increasing risk of reversal. Of course, we start looking also, at our Elliott Wave: x 1, 2, 3, 4, 5, and we recognize and realize that this market is reaching up into the fifth wave of our Elliott Wave. We can start looking for our retracement there, as well. As that happens, you'll notice that the Bulls 'n Bears begins to switch, or change colors from green to yellow. Which is taking us back into the neutral zone, pulling us back into that Fibonacci sweet spot, that we talk about.
The ribbon indicator is a confirmation or an early entry seeing that this market is starting to retrace. We look at the direction of the overall direction or trend of this shortest term moving average. You'll notice that's starting to turn downward. As it comes around and begins to turn downward, you'll notice that it starts to cross the second moving average. Of course, that's when the Bulls 'n Bears changes from green to yellow. Indicating that this market is coming neutral.
As the market swings down around through this low valley time frame. You can see that the ribbon itself is being to converge. Then as the market begins to rally, once again, you'll see that the slower term moving average pops back out above and the market or the ribbon begins to go into a long, even ribbon, again. This is a strong confirmation that this is a good, strong trending market.
The next step is number 4. This is where we come through with strong retracement indicates changing short and medium term views. But long term views hold firm. Notice that the long term view (this is the longer term view, down here) these are holding firm. But the shorter term views are showing that there's some waves in the market.
Think about the wave indicator. This indicator, here, or the ribbon indicator- think about it like water in a river. The actual market Price Bars, themselves, are like rocks in the river. They cause the river to actually fold back and forth on top of themselves, and to cause disruption. When you start seeing the disruption in the river or the disruption in the ribbon- this is where you start seeing markets start to change direction. This is a warning signal for you. Notice that the long term signal, the longer term moving averages are still long and straight and smooth. Giving you an indication to hold tight because this market may have some additional upside potential.
The next step, step number 5, is a short term retracement signal recovery. You'll notice that that's what we see coming up out of this little group, here. This is where we see the Price Bars of the underlying indicator. The Bulls 'n Bears turning from yellow to green, again. That is our short term retracement signal recovery. Which is confirmed by the ribbon indicator coming up out of that same turbulence that we see in the overall long term flow of the ribbon indicator.
The next step is the moving average divergence warning of another reversal. As this market begins to approach a high upward peak, as it did here with number 3, you'll start to see this ribbon start to rotate, start to turn and start to turn and come back down. As you start seeing that, that's where you're going to get the divergence or the warning of reversal signal. It generally comes, of course, after a market makes a big, strong run, like this.
We look for this early signal of divergence of the top and the very fastest moving average to begin to rotate and come off the top of this, trend. As that happens we start looking for that market to change directions, and for the Bulls 'n Bears to change from green to yellow. That is a quick summary of the 6 steps of the ribbon indicator.
Now, I want to take you through and give you some chart examples of how this could be used. Here's a chart that we're looking at, you'll notice that we have a convergence of the ribbon. Whenever we see a convergence of the ribbon, or what we call a squeeze point. This is the time frame in which we start looking for a Buy Signal from the Bulls 'n Bears. A yellow, followed by a green. or vise versa. You can get a yellow followed by a red, a Sell Signal. You'll notice that the best and the strongest signals come when the ribbon is closest together. Where all the ribbons come together into a converging line. That's where you're going to start looking for and find the strongest Buy Signals or strongest Sell Signals. Once the market begins to rally the long green trend, this is where you start seeing that the market ribbon starts to widen out. Notice right up here, at the top of this trend, notice how that ribbon starts to change directions. You can see it curling around that top. That's an early signal that we're starting to top out in this market, and that we're looking for a retracement. As the market comes and swings down off of the top of that, notice that we start getting a crossover of the ribbon. The ribbon then begins to fold itself back over on top of itself.
Of course, the Bulls 'n Bears comes in with a narrow sideways channel, here, indicated in yellow. Then we drop out of the bottom of that. That's where, again, you'll start seeing the ribbon indicator starting to fold over the top of itself. As that happens, you'll notice that this comes along and we go sideways, again. Once we go sideways and that ribbon starts to pinch together into the squeeze point, this is where you're going to get another indication from the Bulls 'n Bears and that's a strong signal. That's a strong Buy Signal. Of course, the narrow being, the ribbon being very narrow, here, starts to widen again, as the market starts to rally up through this rally point.
Let's go onto the next one. Here's another example of a nice, big, long trend. You can see a good example of a strong Buy Signal, right in here, where the ribbon is very close, in almost a little squeeze point or a narrow channel. Then, as we get our Buy Signal, the market begins to rally, once again. Then you can see some points where the market starts to pull back. Right here, is an example of where the market starts to pull back and then you see how the first or the top indicator or the top ribbon line starts to rotate over and come back on top of itself. Notice it didn't cross over. It didn't cross over because the market started to rally again, once again. Giving us an indication that this market has more upside potential. As the ribbon is wide, it means a strong trend. This is a good example of seeing a strong trend in the market, indicated by the ribbon indicator.
The next one, here's another example. Notice that we have a nice wide ribbon, wide ribbon, equals a weak Sell Signal. Notice that's what we're seeing here, a wide ribbon, with a weak Sell Signal. The market didn't follow through. Now, the Bulls 'n Bears, of course, tells us when a market changes from Bullish to Bearish and Bearish to Bullish, but it can't tell you how long that trend is going to last. That's where the Bulls 'n Bears ribbon indicator can come in and give us a little bit better insight. Notice that it didn't have a real tight squeeze point around here. Okay, and as this market begins to rally, once again, we come up here and we get a Sell Signal, notice how the indicator started to fold over itself and has this nice, tight squeeze point. Indicating that this is a little bit better time frame to be getting into this market. The market drops, goes short, and we see a nice strong trend, with a wide ribbons. Again, we're keeping our eye very close on this short term moving average, down here. We're watching the actual direction of the moving average. Visually looking at it, for the retracement. You'll notice that once again, as it starts to rally, again, and come into this time frame, and starts to fold over the top of itself- this is an indication where it confirms the Bulls 'n Bears Buy Signal and away we go, again.
That's just a quick rundown, or a few examples of the Bulls 'n Bears ribbon indicator, and some of the steps and points that we try to look for when using the ribbon indicator.