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Good day everyone. I'm glad to participate in this week's homework. The prof
@reddileep gave us a lecture on an indicator that has several indicators in it. The name of this indicator is VuManChu Cipher B Indicator. From the prof's explanation and little research, I will be answering the questions given in the homework. Please, stay connected
Question 1
Define VuManChu Cipher B Indicator in your own words
VuManChu Cipher B Indicator is an indicator with multiple indicators embedded in it. That's why it's called all in one indicator. It's regarded as one of the best indicators as it was tested and the outcome was superb. Some of the indicators found inside the VuManChu Cipher B Indicator are money flow, market volume, relative strength index, market momentum, stochastic RSI, and so on. All these have the role they play in the indicator. Imagine
having bunches of indicators in one indicator. It means the combination would be very superb because two good heads are better than one
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Screenshot was taken from tradingview.com XRP/USDT pair
When the VuManChu Cipher B Indicator is triggered to reflect on a chart, we see many waves (colors and lines below the chart). All these have their purposes. The indicator at first glance looks complex and confusing because of all the combinations of other indicators, so to a trader using it for the first time, there would be confusion
Question 2
How to customize the VuManChu Cipher B Indicator according to our requirements? (Screenshots required)
Using the trading view platform
Thank God that this indicator is given for free on the trading view platform. I checked on Binance and some other exchanges, but I couldn't find it. Bravo to trading view. They should be called the mother of indicators
So to configure VuManChu Cipher B Indicator on tradingview, we follow the steps below
- Click fx, search for VuManChu Cipher B Indicator, and select to be activated on the trading chary as shown in the image below.
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Screenshot was taken from tradingview.com BTC/USD pair
But we should note that the indicator would look complex and we might find it difficult to understand all the waves. So to make it simple, we would need to uncheck some of the options in the settings. To do that, I would click on the settings and remove some of the lines, waves, and colors to get a straightforward view of the indicator
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Screenshot was taken from tradingview.com BTC/USD pair
Some of the things we're going to get rid of are
- Divergences (WT Regular divergences and 2nd WT Regular divergences)
- VWAP
- MFI bar color
Let's see the images
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Screenshot was taken from tradingview.com XRP/USDT pair
The divergences have been disabled on the chart
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Screenshot was taken from tradingview.com XRP/USDT pair
VWAP also unchecked.
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Screenshot was taken from tradingview.com XRP/USDT pair
MFI Bar Colors was also removed, and the okay button was clicked.
These are the four indicators I would be removing from the chart. There are many strategies every trader can use to trade with the VuManChu Cipher B Indicator. I chose to use the stochastic RSI with the remaining indicators, that's why I didn't disable it from the chart. So this is the way to add the indicator to a chart. This is how the chart looks like after setting it up to my requirement
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Screenshot was taken from tradingview.com XRP/USDT pair
Question 3
Explain the appearance of the VuManChu Cipher B Indicator through screenshots. (You should Highlight each important part of this indicator by explaining their purpose)
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Screenshot was taken from tradingview.com XRP/USDT pair
From the above image, there are many waves and lines, and they all have their purposes.
1. Lines on the red and green cloud: This is the divergences. From the image, we would notice that there are tiny lines at the edge of both the red and green cloud. Those lines happen to be the divergence line. But these lines are categorized as hidden divergence lines. If not careful, traders might not see the importance or even notice the existence on a chart. And the hidden divergence can help traders to spot a long trend of bullish or bearish movement which can result in huge profit
2. Waves in yellow: (VWAP)Volume Weighted Average Price. This is used mostly to read price action within a short time frame
3. Green and red dots : These dots show the movement of price. (Green = Price going bullish. Red = Price going bearish). When the green dot appears, it's an indication of a bullish movement which means traders are buying. On the other hand, when the red dot shows, it means traders are selling off
4. Purple and blue lines : They are the stoch RSI lines. The stochastic RSI that is indicated by the purple and blue lines on the chart is to buttress the indicator to show the level of oversold and overbought. Looking at the chart, we would see that the stochRSI indicator moves between 0 and 100. Traders can use this to know the next trend and spot reversal because when the price moves below 30 and above 70, the lines would indicate it and this with other confirmation from the rest indicators would give the trader an insight on the next market move
5. Green cloud: It indicates the money flow in
6. Red cloud : This shows when money is flowing out of the market. This happens when there's huge sales and as traders sell, money move out and the red cloud is formed
7. Green cloud: This shows the opposite of what the red cloud shows. In every trade, we should expect buyers and sellers, so when the buyers step into the market and money start entering, the green cloud would start forming and that implies that money has started flowing in. At this point, a trader can take a long buy and make some profit from the market
8. Blue wave : It's also called the momentum wave. It moves with the price as it goes up and down. If well checked on the chart, we would notice that it's the main oscillator that almost takes the whole space and it's more visible than the others. The blue wave is considered one of the most important parts of the VuManChu Cipher B Indicator because it can signal the trader when there would be a reversal. Whenever there is a cross between the blue cloud and the zero line, the market tends to move up or down. So with this, traders can use the cloud crossing to know the next trend of an asset
Question 4
Demonstrate your preparation for the Trading Strategy combining other indicators. (Instead of showing the addition of indicators to the chart, you should explain the purpose of each indicator for this trading strategy.)
Initially, I left the stoch RSI on the chart because I wanted to use it here in this question. So it would be the first indicator I would be using. Also, the EMA and CCI would be used together with the stock RSI. I just want to experiment and see how far it would go together. It's fun anyway
But as I go further to configure the indicators, I got a message to upgrade to the advanced version to be eligible for using multiple indicators. So this limited me to using only the EMA, but I will use the CCI too and see what it would be like. But first, let's set the EMA to 200 and 50 respectively, before checking out the combination of EMA with the indicator
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From the above image, we can see the EMA set to 200 and 50 respectively. While this is in place, I'm looking forward to when the EMA lines would give the signal for me to enter the market and place a trade. So as it goes, I would have to wait for the 50 EMA to cross the 200 EMA downwards to get a better entry point to follow the bearish trend. Conversely, if the 50 EMA crosses the 200 EMA upwards, that is an indication of a bullish trend, so with this understanding, I can be ready to enter the market (buy long, or sell short) depending on what the chart reads
Moreso, I would have to confirm the price movement from the VuManChu Cipher B Indicator. While I'm looking for the EMA lines to cross, I'm also looking at the stoch RSI lines too, because, from the settings, the stoch RSI indicator moves from the VuManChu Cipher B Indicator zero line to 100, and this allows me to know when an asset is overbought and oversold, which helps to spot reversal or trend continuation
Also, the red and green cloud would be put into consideration. When the red cloud is shown on the chart, it's an indication that money is flowing out of the market and this would result to a bearish movement in price
The red dot also denotes a downward trend. Alternatively, the green cloud would give a notification to the trader that money is flowing into the market likewise the red dot would hint that the price of the asset would go bullish
And lastly, the blue cloud which is seen as the main part of the indicator always follows the trend and price movement. When it crosses the zero line, in either direction, there's likely to be a reversal. So the purpose of using these indicators is to get multiple signals before delving into the market
Question 5
Graphically explain how to use VuManChu Cipher B Indicator for Successful Trading. (Screenshots required)
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The VuManChu Cipher B Indicator is mainly used to spot trends, detect reversal, show when money is injected and taken out of the market, and also, reveal when the price is going up or down. From the above image, I marked some points that signify a purpose. The indicator can be used in several ways. When the blue cloud crosses the zero line, we can see from the chart that there was a bullish movement of price and the EMA lines also confirmed the bullish movement as the 50 EMA crosses the 200 EMA. The green dot can also tell a trader that the money is flowing in while the red signifies money flowing out. From the image, there was a green line showing immediately after the EMA crosses and the 50 stays above the 200.
Also, when the green cloud started forming, the market is bullish and traders can take the opportunity to buy, as seen in the chart. Alternatively, when the cloud shows red, it means the bears are taking over, and a sell order should be the next move. The stochastic RSI is also important here. It can be used to note the oversold and overbought level because it moves from 0 to 100, and it doesn't pass the zero line. So whenever it touches the zero line, it will surely return and that signifies a bullish trend, and when it goes up to 100, we can be sure that it would come back down. All these are put into consideration when using the VuManChu Cipher B Indicator, and we can see them from the chart. Having said all these, we must also consider risk management while using the indicator. These are various ways we can use the VuManChu Cipher B Indicator for successful trading.
Question 6
Using the knowledge gained from previous lessons, do a better Technical Analysis combining this trading Strategy and make a real buy or sell order in a verified exchange. (You should demonstrate all the relevant details including entry point, exit point, resistance lines, support lines, or any other trading pattern)
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Conclusion
The Vumanchu indicator is a very good indicator that helps a trader to know where the market is moving. With all the indicators in the Vumanchu indicator, chart can be well analysed. I love the fact that I could use it with other indicators like the stochastic RSI. As a trader, I think Vumanchu indicator would make a good list in my choice of indicator.
Thanks for reading, and my regards to the professor @reddileep for delivering a wonderful lecture.
Thanks. This is ckole the laughing gas
One love.