True Center Band (TCB) indicator and Market Analyzer for NinjaTrader 8 NT8

This is the NinjaTrader 8 NT8 version of True Center Band (TCB) indicator
If you have purchased NT7 version, you can get it for free.
 

You might wonder, is there an indicator can show the trend, different levels of support and
resistance, and the boundary of price action? The answer is yes, True Center Band (TCB) indicator is
capable of doing all of them.

It consists of one center line to measure the center of price range within a given period,
and three channels (bands) represent different support and resistance levels.

True Center Band may look like some other indicators, such as Center of Gravity (COG) and polynomial
Regression Channel (PRC). But there is one major difference, TCB never repaints, because it is not
calculated by future data. Reliability makes TCB looks good, works better.

True Center Band is specially designed to work on all intraday charts (tick, mins, renko, range, etc.) and daily chart.
It also works on all markets (Stocks, Futures, Forex, Options,ETF, etc.)
 

For more details please check the NT7 version description.
http://www.patternsmart.com/cart/index.php?route=product/product&product_id=311&search=tcb

How to use True Center Band indicator on Minute charts.

True Center Band(TCB) is specially designed to work on intraday and daily chart.

1. The top upper line(dark green) can be considered as overbought.
2. The bottom lower line(Red line) can be considered as oversold.
3. The overbought channel: between the 2 green lines.
4. The center channel: between the 2 white lines.
5. The oversold channel: between the 2 red lines.
6. The upper buffer channel: between the light green line and the white line.
7. The lower buffer channel: between the light red line and the white line.

To ride the wave, you must be able to detect the wave first. TCB is a perfect solution for you.
The center line shows the trend of the price for a given period, and the bands indicate possible price range within overbought and oversold areas.
Now, let’s see how to use TCB on Min charts.

The image below shows AUD/CAD in a 60min chart with TCB period=25.
Area (1) and (2) are not considered as good entry points, simply because the price may still go up from there.
However, area (3) and (4) are safer to enter, since prices at the overbought and oversold areas has higher chance to reverse.
By the way, it’s a head-shoulder pattern at (3) which is also a strong reversal signal.


The image below shows EUR/USD in a 60min chart with TCB period=20. The wave is clearly presented in front of you.
There is a W-top pattern right after the price cross above the overbought channel. It’s safe to short from there, but don’t forget your stop loss order. 


You will see how TCB works in a downtrend as shown in the image below. 10-Year T-Note (ZN) futures in a 30min chart with TCB period=25.
The price will move between the center line and the bottom line, and the center line becomes a resistance before it breaks out.


The picture below is EUR/USD in a 60min chart with TCB period=20.
The highlighted area in the image below can be considered as a good entry point. 

The picture below is also a 60min chart of EUR/USD with TCB period=50.
(1) is not ideal for long entry, because the price didn’t last long enough after it cross above the center channel.
But (2) is a better and safer area for long, given the price action is more stable after it marched into the center channel.

The picture below is also a 60min chart of EUR/USD with TCB period=20. The highlighted area in the image below is also a good entry point.
The price trend is almost the same as the previous two charts, the only difference is the date.
 You can say that history repeats itself again.


The picture below shows an uptrend of 10-Year T-Note (ZN 12-15) futures in a 60min chart with TCB period=50.
The 2nd peak is a better entry point to short than the first peak, because the chance for price to fall back after it crosses above upper buffer channel is relatively higher
And the 3rd peak is the best place to short in all 3 peaks. It is a perfect example of Elliott wave theory.
Without TCB indicator you can hardly tell where and when the Wave 5 ends. But with TCB, even inexperienced traders can easily confirm it.


(1) and (2) form a Rising Wedge pattern in the image below. Both orange (1) and (2) are in overbought channel, and at (3) the price cross below the pattern trend line.
The Rising Wedge pattern shows a weak rally, which, in most cases, will end up breaking through the lower line, TCB can be used to confirm the end of an uptrend.
It is a Symmetrical Triangle pattern at (4), this pattern can be both continuation and reversal. Since it happened at the oversold channel, a reversal is more likely to follow.


Take a look at the 4 hour chart of /TF 12-15.



In the chart below, the center band is the support when the price first attempted to break through it. And the center band becomes the resistance at (1) after the downward breakout.
If you decide to enter short at (1), it’s recommended to flatten your position when the price breaks through the oversold channel. 


As you can see from the chart below, the price trend is U shaped, in the meanwhile the TCB is an arch.
It means the current price trend diverges from the accumulated trend within a given period of time.


The chart below is also a good example of divergence. In box (1) the price trend is an arch and the TCB is U shaped.
In box (2) it’s the opposite.


The following chart shows you how to catch the major trend reversals.
If we load a relatively long period of time to chart, such as loading more than 100 days on a 60 min chart.
We can easily notice that most of the major trend reversals are near the oversold and overbought channels.
The minor reversals at (1), (2) and (3) are harder to catch, since we can’t make sure if the price will continue the trend or not.
Compare to the minor reversals, TCB makes the major trend reversals easier to catch.


The following chart is another example of how TCB helped to confirm a chart pattern.


It’s always helpful if you recognize chart patterns.
A Channel Down pattern starts from the first overbought channel on the left side of the chart.
It followed by a Falling Wedge pattern at (1), just after the first time when the price hits oversold channel.
And the price breaks through the pattern trend line within the center channel and continue to go up until it reaches the top upper line at(2).


The price breaks through the support line of Ascending Triangle pattern which is also the center line, followed by a downward breakout.

How to use True Center Band indicator on Daily charts.

True Center Band is specially designed to work on intraday and daily chart.

1. The top upper line(dark green) can be considered as overbought.
   
2. The bottom lower line(Red line) can be considered as oversold.
   
3. The overbought channel: between the 2 green lines.
   
4. The center channel: between the 2 white lines.
   
5. The oversold channel: between the 2 red lines.
   
6. The upper buffer channel: between the light green line and the white line.
   
7. The lower buffer channel: between the light red line and the white line.
   

If you want to ride the wave, you must be able to see the wave first. There is no doubt that TCB is the right indicator to get the job done.
The center line shows the trend of the price within a given period, and the bands indicate the possible price range between overbought and oversold areas.

Now, let’s see how to use it on Daily charts.

In the chart below, AUD/CAD broke out the 2nd lower band at the end of Nov 2014, but didn’t reach the bottom band.
In Dec 2014, it broke out the 3rd lower band (Red line at the bottom) twice.

When is the best time to entry?

In my opinion, the circled area is the best time for a long position to be established.
Why not entry right after the oversold breakout?
Because if you enter at the first breakout, there may be a 2nd breakout waiting for you.
The circled area confirmed the reversal trend, so that’s a better entry point comparing to the previous two  breakout areas.
On the right side of the chart, I highlighted an entry point for short, if you are familiar with chart pattern, then you will know it’s a Head-shoulder pattern.
The Head part fall back to the center channel before touching the overbought channel.
Prior to formation of head-shoulder pattern, the price moved in the center channel, and there were a couple of instances break through the lower buffer channel, however given there was no upward breakout formed, the Head-shoulder is clearly a pump and dump.



As you can see these blue arrows in the chart below, showing the price trend and the direction of TCB are opposite — we have a slope divergence situation.



As shown in the chart below, at both positions (1) and (2), the price was quickly pulled up before it crossed above the overbought channel.
There is a high probability that the price will go down in a situation like this.
The price falls back to the oversold channel from position (1) to position (3), unfortunately, you can’t be certain whether the price will bounce back after hitting the oversold area.
However, a W bottom pattern, which has served as a strong reversal signal at (3) definitely makes the situation clearer.



Overbought at (1) which is a good entry point for short, and Oversold at (2) where we should close the short position and enter long.



Take a look at the chart below, it’s a daily chart of MSFT from October 2013 to October 2015.
The price fall after it crossed above Overbought area at 1,2,3,4,5,6.
And reversal at 7 and 8 when price crossed below oversold channel.



The chart below is LNKD Daily chart from 2014.2 to 2015.9, both (1) and (3) are good for long, and (2) is good for short.
Between (1) and (2), there also are couple times that price cross above the upper buffer channel, but they are not good entry points.
Because these points are not overbought, if you short in ‘upper buffer channel’ there is chance that the price will continue to go up.
I’m not saying that the price will definitely fall when it hits ‘top upper line’, but the probability is quite high.



The following pictures are examples of how price reacts when it cross over upper and lower channels.

True Center Band (TCB) indicator for NinjaTrader

True Center Band (TCB) indicator consist of a center line and 4 price channels (bands) above and below it.
It measures the center of the price in a given period of time, and uses 2 different methods to plot upper and lower bands to show possible support and resistance.

True Center Band may look like some indicators, such as Center of Gravity (COG) and Polnomial Regression Channel (PRC). But there is one major difference, TCB never repaints, because it is not calculated by future data.

The first video is COG and the second one is TCB, both of them plotted on the same date and time frame.
On the 2nd video TCB is on band type3. You will see how COG repainted, but TCB didn't.




Check these video to see how TCB and COG/PRC plot differently in the same timeframe.

When using the TCB, center line is the main trend of the price movement, the bands indicate the ranges and possible overbought and oversold areas. In a strong uptrend, prices usually fluctuate between the first upper band and the second upper band. And a possible reversal will happen when price out of the bands.

True Center Band (TCB) indicator has 6 Parameters:

1. Band Type: choose which type to plot on chart.
2. Multiplier1: Only work on Band Type 2. To adjust the width of 1st upper and lower bands.
3. Multiplier2: Only work on Band Type 2. To adjust the width of 2nd upper and lower bands.
4. percent1: Only work on Band Type 3. To adjust the width of 1st upper and lower bands.
5. Percent2: Only work on Band Type 3. To adjust the width of 2nd upper and lower bands.
6. period: the number of bars used to determine the TCB.

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This NinjaTrader indicator is developed under Version 7 and it is NOT necessarily compatible with NinjaTrader Version 6.5.

Please note: True Center Band is a very useful indicator, but cannot be used as sole evaluation criteria.