vpg rainbow effect, page-6

Hi Delta,

Ok the Rainbow is comprised of many many many moving averages.

All the moving averages (MA's) are all different time frames that follow the same path - or one path - of price action and hence price direction.

Think of all these moving averages as a separate piece that make up an orchestra. Each their own instrument but when put together create a pattern, or sequence of patterns that form a trend. These averages just follow that trend.

As time progresses and a trend emerges, then these averages just mathematically follow suit.

But the beauty of the rainbow is that you can at a quick glance, see all time frames and the direction in which these averages are heading.

At the moment the average price from a 1 day average to a 100 day average are heading up. So the probability of a continuing trend is still very strong.

Once a trend is established then its a lot harder to break something that has already got a foothold on the general herd mentality. And herd mentality creates a trend. It human nature to trend. Humans do not like confrontation and prefer over time, unity. Thats how financial markets tend to operate since the Roman empire.

I like the VPG story to date.

I hope this helps.

Cheers
Babylon