If you aren’t ready yet to fully automate your trading/investing, but still want to improve your results consistently, the chart below showcases a set of tools to help you confidently navigate Bitcoin’s weekly chart price action, or that of any other instrument and time frame. Here’s how these indicators work and how they can be used for trading or investing.
1. OMEGA Signal Algorithm
The OMEGA signal algorithm is represented by the upward and downward triangles on the price chart:
- Upward triangles below the chart: Indicate buy signals, optimized to capture bullish opportunities.
- Downward triangles above the chart: Signal sell opportunities when bearish momentum takes hold.
These clear and actionable signals help traders identify high-probability entries and exits.
2. Trend Momentum Algorithm (bottom of chart)
The Trend Momentum Algorithm provides powerful insights into market direction:
- Midline Crosses:
- When the blue/red line crosses above the dashed midpoint, it signals a bullish trend.
- When it crosses below, it indicates bearish momentum.
- Trading by Color:
- Blue indicates long positions, especially above the mid-line, or closing shorts.
- Red indicates short positions, especially below the mid-line, or close longs.
3. MMC Dot Signals (Reversal Points)
The MMC dots (Mohren Momentum Congestion dots) on the Trend Momentum Algorithm pinpoint reversals with precision.
Most reversals don’t happen on a single candle. Often times there is some chop around the reversal. The MMC dots help you find multiple optimal entry points with precision.
- Green dots: Highlight bullish reversals, marking potential price lows.
- Red dots: Mark bearish reversals, signaling potential price highs.
- Larger/lighter dots: Represent stronger momentum convergence and higher confidence signals.
Why Are MMC Dots Unique?
If you’ve ever relied on crossover signals to time trades, you’ve likely encountered entering too late or missing opportunities altogether. MMC dots address this issue by often appearing before traditional crossovers.
For example, in the image below, a red MMC dot appears at the top of the indicator (below the price chart of Bitcoin) well before the crossover or color change, giving an early signal of bearish momentum.
What Are MMC Dots?
MMC dots represent areas of momentum congestion of several proprietary momentum derivatives, where price is likely to revert before continuing a new trend. These points often coincide with key turning points at trend reversals:
- Highs at downward reversals
- Lows at upward reversals
Why Is This Important?
- Stronger Risk Management: Selling higher or buying lower improves entry points, reducing stress and increasing the potential for profitable trades.
- Maximizing Trends: By creating more distance between entry and exit points, traders have a greater chance of capturing meaningful gains.
- Stop-Loss: Entering further away from the direction of your trade lets you set tighter stops without being stopped out all the time.
Example: MMC Dots and Price Reversions
In the image below, observe how MMC dots coincide with significant price reversals:
- In the left green boxes below, MMC dots (bottom) mark the turning points in Bitcoin’s price trend (top), offering clear signals to sell longs or buy shorts.
- In the right green boxes, Bitcoin’s price (top) reverts to a significant level before resuming its downtrend. Here, the Trend Momentum Algo (bottom) already signals bearish momentum with a red indicator fill and a break below the signal line. Despite this, the price briefly revisits a key level, offering an ideal short entry or a final chance to exit a long position before the larger downward move.
In both examples, MMC dots align with price action, providing reliable signals for managing positions.
A Simple, Flexible Approach
With these indicators, you can trade Bitcoin confidently in multiple ways:
- Upward and Downward Triangles: Use these clear signals for identifying buy and sell opportunities.
- Trend Momentum Colors: Trade long when the line turns blue and short when it turns red.
- MMC Dots: Capitalize on reversal points identified by the green and red dots.
This flexibility ensures that traders can adapt their strategy to market conditions, whether focusing on trend-following, reversals, or momentum-based setups.
To learn more, you can see our indictors here.
