Displays coloured volume bars to determine the current trend:
- Blue and Green for an upward trend
- Red and Orange for an downward trend
Mirror 1
This indicator was created by Edgar Kraut, and was described in the July 2011 issue of Technical Analysis Of Stocks & Commodities. The results from his testing of this indicator were profitable, but I do believe that other indicators and methods should be used for supporting the Rainbow Volume indicator. I've had good experience applying CCI to this indicator, but I have not tested this fully.
The author also optimized the Rainbow Volume indicator for each year, so he had a range of 5 to 10 periods from 2002 to 2010. I found it the 10 period setting to be the more the suitable setting.
***Do not trade with this indicator without fully understanding its weaknesses, for all indicators have one***
