As the ‘cop’ function demonstrates, the Curve has a pretty simple calculation. The first step is to calculate the at a longer and shorter window length. Next, the sum of the two values is calculated and finally a of a user defined length is calculated(this is the Curve).
The ‘cop()’ function set the foundation to allow us to implement our modifications. As you can see in the graph, there are 3 different lines (2 histogram and 1 normal line) comprising the values based on the of high, low, and closing prices. We liked this layout because it allows traders to easily identify the curve’s and the balance of negative vs. positive momentum.
The Curve based on high prices is plotted as the teal histogram, wile the pink histogram represents the Curve of low prices. The curve based on closing prices is the red and green alternating line plotted on top of the two histograms.
We included some notes on the chart to help with interpreting the three curves.
There are two common approaches traders can take when trading with the indicator:
1. Trade based on closing price curve: Go long when line changes from (red) to (green). Then, go short when same line changes from to .
2. Trade based on crossings of the zero-line. This could be based on the high, low, or closing price curves, but closing price is the safest bet. So, go long when it crosses from negative into positive territory and short when it crosses under the zero line from positive into negative territory.