WEBVTT 00:05.780 --> 00:06.380 OK. 00:06.480 --> 00:11.750 Now let's look at some examples so you can understand clearly how the parabolic essay or indicator works 00:12.750 --> 00:14.190 when using this indicator. 00:14.220 --> 00:16.530 I want you to keep two things in mind. 00:16.680 --> 00:23.520 First don't use this indicator alone meaning you'll need to use it with other trend following indicators 00:23.820 --> 00:27.950 like the exponential moving average to avoid false signals. 00:28.320 --> 00:31.770 And second always look at the overall market trend. 00:31.770 --> 00:37.530 If the trend is down the DOT should be above the price candles and on the other hand when the trend 00:37.530 --> 00:42.170 is up the dots should be below the price candle's OK. 00:42.230 --> 00:46.070 Now we'll analyze this chart from the left to the right. 00:47.360 --> 00:53.540 First of all we had that EMJ 20 above the EMEA 9 and both lines were sloping down. 00:53.840 --> 00:57.000 The EMEA 50 was above the red and blue lines. 00:57.020 --> 00:59.500 The price was below these moving averages. 00:59.690 --> 01:03.840 So we can easily predict that this was a strong downtrend. 01:03.850 --> 01:10.360 Now we have an additional downtrend signal the parabolic dots were above the price bars so we could 01:10.360 --> 01:13.730 be more confident that the price would continue to drop. 01:14.660 --> 01:17.830 As you can see on that chart we had a false signal here. 01:17.900 --> 01:21.520 The dots move from above to below the price bars. 01:21.560 --> 01:24.320 This gave us a false uptrend signal. 01:24.320 --> 01:25.390 Why. 01:25.490 --> 01:28.610 It's because the overall trend was still going down. 01:28.610 --> 01:33.800 And that's also the reason why I keep telling you that when using this indicator you must look at the 01:33.800 --> 01:40.890 overall market trend to avoid false signals as you can see we had another uptrend signal here. 01:40.940 --> 01:47.920 The dots were below the candles while it should be above the candles because we were in a downtrend. 01:47.980 --> 01:53.460 So I want you to take note of this when you find that the dots keep staying below the price bars in 01:53.470 --> 01:57.600 form a dotted line that is sloping up while we're in a downtrend. 01:57.670 --> 02:03.550 We can predict that the trend will reverse soon meaning the downtrend is going to end soon and the price 02:03.550 --> 02:10.440 will start going back up the trend reversed when the dots moved from above to below the candles that 02:10.450 --> 02:17.070 EMJ nine crossed above the EMJ 20 and both lines were sloping up so we could easily predict that the 02:17.070 --> 02:18.850 price was going to rise soon. 02:19.050 --> 02:22.710 So it was time to buy low and make an easy profit. 02:23.680 --> 02:29.350 A few weeks later the dots move from below to above the candles and they kept staying above the candles 02:29.350 --> 02:33.170 and formed a dotted line that was sloping downward. 02:33.190 --> 02:37.180 In this case we could easily guess that the trend would reverse soon. 02:37.210 --> 02:42.520 We could confirm this when the blue line crossed below the red line and when the price broke down through 02:42.520 --> 02:45.660 the orange line where the EMJ 50. 02:45.860 --> 02:48.700 So we have a strong downtrend signal here. 02:48.740 --> 02:51.330 Chances are the price will keep going down. 02:51.530 --> 02:55.430 So it's time to sell our coin before the price drops further. 02:58.030 --> 03:00.550 Now let's have a look at another example. 03:00.700 --> 03:07.330 We had an uptrend signal here the blue line crossed above the red line and both lines were sloping up. 03:07.330 --> 03:14.410 The dots moved from above to below the candles that IIM-A 50 was below that EMJ nine and EMJ 20. 03:14.410 --> 03:17.550 The price was also above all of the moving averages. 03:17.770 --> 03:21.860 So we could consider this a strong uptrend. 03:21.890 --> 03:28.070 You see this strategy worked perfectly well for spotting market trends the price of this coin skyrocketed 03:28.070 --> 03:34.520 by over 800 percent from 100 Santoshi to over 800 Santoshi in just one month. 03:35.000 --> 03:40.850 When the coin was in an uptrend the DOT should be below the price candle's So this was probably a false 03:40.850 --> 03:42.190 downtrend signal. 03:43.010 --> 03:47.820 As you may notice we had a resistance level here at around 750 Satoshi. 03:48.160 --> 03:51.080 It prevented the price from rising up many times. 03:51.200 --> 03:55.760 And when the price broke down through the resistance level we could easily guess that the trend would 03:55.760 --> 04:03.380 reverse soon the trend reversed when the EMJ 9 crossed below that EMJ 20 and the dots move from below 04:03.380 --> 04:09.170 to above the price candle's the downtrend signal was stronger when the price dropped below that EMJ 04:09.170 --> 04:10.130 50. 04:10.490 --> 04:17.300 The downtrend continued until the dots move from above to below the candles you see the dots kept staying 04:17.300 --> 04:21.270 below the price bars while the overall trend was down. 04:21.320 --> 04:23.920 This would tell us that the trend would reverse soon. 04:24.660 --> 04:29.150 And we had an uptrend signal when the blue line crossed above the red line 04:32.130 --> 04:32.710 OK. 04:32.840 --> 04:34.280 Another example. 04:34.280 --> 04:37.520 Now let's analyze this chart quickly. 04:37.530 --> 04:39.410 We had an uptrend signal here. 04:39.480 --> 04:42.430 The dots move from above to below the price bars. 04:42.660 --> 04:47.410 The blue line crossed above the red line and the price broke up through the orange line. 04:47.520 --> 04:50.850 So we could easily predict that this was a strong uptrend. 04:51.690 --> 04:56.220 We had several false downtrend signals here because the overall trend was up. 04:56.250 --> 05:02.460 The dots should be below the price candle's the trend reversed when the dots moved from below to above 05:02.460 --> 05:09.480 the candles and that EMJ nine crossed below that EMI 20 the downtrend signal was stronger when the price 05:09.480 --> 05:16.560 broke down through the EMJ 50 the downtrend continued until the dots moved from above to below the price 05:16.560 --> 05:18.040 bars. 05:18.120 --> 05:22.530 You see the dots kept staying below the candles while the overall trend was down. 05:22.530 --> 05:26.570 So in this case we could easily guess that the trend was going to reverse. 05:27.450 --> 05:32.880 The trend reversed when the dots move from above to below the candles and the blue line crossed above 05:32.880 --> 05:33.840 the red line. 05:34.640 --> 05:38.450 As you can see on the chart we've had another downtrend signal here. 05:38.450 --> 05:41.880 The price has already broken down through the EMJ 50. 05:41.900 --> 05:44.750 So this is going to be a strong downtrend. 05:44.930 --> 05:50.510 And what I would do now is to sell my coin so I can buy it back at a lower price later when the trend 05:50.510 --> 05:51.350 reverses 05:53.960 --> 05:54.420 OK. 05:54.500 --> 05:56.700 Let's have a look at another example. 05:56.840 --> 06:00.310 As you can see on the chart we had an uptrend signal here. 06:00.590 --> 06:06.470 However this uptrend was weak because we had a resistance level at around 70 200 Satoshi that could 06:06.470 --> 06:08.920 prevent the price from rising up. 06:08.930 --> 06:13.350 So in this case we could guess that the trend would likely reverse when the price failed to break up 06:13.350 --> 06:15.670 through the resistance level many times. 06:16.450 --> 06:21.790 So what I would do in this case is to sell my coin at about seven thousand Santoshi or three percent 06:21.790 --> 06:28.620 below the resistance price that trend reversed when the dots move from below to above the price candles. 06:28.740 --> 06:34.760 And when the blue line crossed below the red line the price was below all of the moving averages. 06:34.920 --> 06:38.490 So we could consider this a strong downtrend. 06:38.490 --> 06:42.980 We had a false uptrend signal here because the overall trend was down. 06:43.890 --> 06:50.700 The trend reversed again when the EMJ 9 crossed above the EMEA 20 and the dots move from above to below 06:50.700 --> 06:54.850 the candles the price broke up through the EMJ 50. 06:54.870 --> 06:57.360 So we knew that this was a strong uptrend. 06:58.320 --> 07:03.170 You see the dots kept staying above the candles while the overall trend was up. 07:03.180 --> 07:09.270 We also had a resistance level here at about 6200 Satoshi that could stop the price going up. 07:09.270 --> 07:14.220 So we could guess that the trend would reverse when the price failed to break up through this resistance 07:14.220 --> 07:14.830 level. 07:15.800 --> 07:20.540 We had a strong downtrend signal here when the blue line crossed below the red line. 07:20.600 --> 07:28.010 The dots move from below to above the candles and the price broke down through the EMJ 50. 07:28.020 --> 07:33.210 So now you've learned everything about the parabolic S-A are and how to apply it to make a profitable 07:33.210 --> 07:35.630 trade in the next lesson. 07:35.730 --> 07:40.890 We'll dive into another technical indicator that can help you detect trend reversals.