If you use TradingView you probably already watch various indicators. Of course, there is no magical indicator what will always tell the right time to buy or sell. But some do provide additional information to improve chances of getting better trade/investment results. Obviously this is not a financial advice, just my thoughts about this unique indicator I was told about recently.
Hash Ribbons indicator is an open source script written by Capriole Charles on TradingView. To see the explanations by the author and see the full code visit Hash Ribbons by Capriole Charles on TradingView.
To apply this indicators on your TradingView charts, simply click the Indicators button and in the search type in Hash Ribbons, then click the first result to apply on your chart. To verify you are getting the correct one, make sure to look the author's name next to the indicator.
The indicator is free to use and open source for those are interested in reviewing the PineScript code.
Normally, indicators use various calculations on price values like open, close, high, low of the given asset. Sometimes we also see volume values being used as well. What makes Hash Ribbons a unique indicator is, it is specific for Bitcoin and it uses hash rate values.
On the screenshot above you can see at the top section the Bitcoin price chart, and at the bottom section the Hash Ribbon indicator. It has some green and yellow lines, and different color circles at the top of the indicator.
Forget about everything else, and only look at the Blue Circles with a "Buy" written under them. To understand what everything else does, or if you even would need them, you can review the code and explanations by Capriole Charles. But for the purposes of this post, let's only look at the Blue Circles. Here is how author explains them:
The "blue" circle is the first instance of positive momentum following recovery of Hash Rate (1m HR > 2m HR). This is historically a rewarding place to buy with limited downside.
You can see from the screenshot above that when Blue Circles appeared price of Bitcoin did go up, sometimes slowly, sometimes right away. The screenshot above is showing the weekly chart. We can use daily or other timeframes. The blue circles will appear on the same date regardless the timeframe.
When I looked at the full history, I counted about 15 appearances of blue circle and in most cases if not all the price ended up going up afterwards, although sometimes not right away.
Review the indicator yourself and see what you think. I also tried this on Eth, LTC, BCH charts and they also showed positive results after the appearance of the blue circles.
These blue circles are rare, and mostly only show up twice a year or so. But still something interesting to keep in mind.
No indicator should be used with full confidence as a predictor of prices in the future. But they could be used with combination of other tools of technical analysis to improve the probabilities of our trade biases with proper risk management plans.
Have you seen this indicator before? What do you think about it? Let me know in the comments.