Foundations

Included in this section are explanations of the primary components of BirbicatorPRO, how to interpret them against price action, and the systems leveraged to build the core algorithm.

BirbicatorPRO Origins

BirbicatorPRO is based on several time-proven, as well as new, systems combined to provide each trader with a range of visual and data centric market intelligence to confirm or renounce trading biases that can lead to actionable trading decisions.

BirbicatorPRO is based on the following components and strategies:

  • Ichimoku

  • Sine Wave Analysis

  • Standard Deviations and Price % Deviations

  • Fibonacci Levels and Trends

  • Anchored Volume Weighted Average Price (A-VWAP)

  • Average True Range (ATR)

  • RSI Overbought / Oversold

  • Williams Fractal Pivots

  • Combined Price Oscillator Divergences

    • RSI, MFI, MACD, MOM, CCI, OBV, STOCH, VWMA, CMF, Directional Movement (DM)

  • Birbicator StochTKD

In addition, BirbicatorPRO has carefully crafted a unified approach to viewing the range of indicators included within the system such that it can be used as a stand-alone trading system as well as one that adapts to the range of trading styles and visual needs for each type of trader or trading situation.

Usage of the system is completely dependent on the style of trader, and is meant to adapt, adjust, and grow with each specific user. There is no “Right” or “Wrong” way to use the composition of the tools held within BirbicatorPRO, as each trader will find value in one or many of the key functions. Finding your personal “system” is at the core of finding your own edge in the market, and BirbicatorPRO was built to provide traders with a customizable framework for developing their own system while also incorporating trusted “trading rails” that help new and advanced traders alike.

The "BaseLine"

BirbicatorPRO is built around a “BaseLine” that creates and informs many other aspects of the system. The BaseLine is always present and provides trend momentum identification, support and resistance and dynamic coloring based on the current price. The BaseLine is a composite moving average that has been specifically crafted using elements of Inchimoku, Sine Waves, and standard deviations using Fibonacci.

This is truly a custom designed moving average that exists nowhere but within BirbicatorPRO.

The BaseLine's coloring scheme is based on the close price of the asset being viewed. By default, BirbicatorPRO's coloring scheme is ORANGE for "Bull" and BLACK For "Bear."

We use the term Bull and Bear to denote directional bias within the context of where price is relative to previous price history.

When price closes ABOVE the BaseLine, "Bull" is returned indicating a color of ORANGE.

When price closes BELOW the BaseLine, "Bear" is returned indicating a color of BLACK.

Momentum "Wave"

Price is continually converging and diverging against an average of price and time. This is historically what we call a “moving average” and the popular indicator “MACD” which represents an oscillator view of the 12 and 26 period moving averages converging and diverging from each other. In addition, moving averages in general represent the momentum pulse of an asset against time. The sum of all candles divided by the number of candles provides an "average" price of over a period of time. Finally, price "clouds" are used in systems like Ichimoku to define key support and resistance zones that are based on lagging or leading definitions of where market price action has historically shown to be reactive.

BirbicatorPRO provides a completely new way to view these same dynamics using several trend detection approaches that incorporate standard deviations and sine wave mechanics. When using BirbicatorPRO you will notice that a 4 stage “wave” has been constructed based on several moving averages, with the BaseLine as the "Core" of the wave. As the BaseLine diverges from the “wave” BirbicatorPRO presents varying colors that can be associated with trend strength.

Each “stage” of the Wave can be considered a support or resistance line when measuring price movement.

NOTE: Changing the "TREND MODE" option will shorten or lengthen the core lookback period used by BirbicatorPRO. This will change the dynamic of how the wave is calculated which in turn changes the visual representation of the wave over time.

This is further discussed within the "Trend Mode" section.

Wave "Strength" (Trend Strength)

For simplicity purposes the "power" of the wave is demonstrated by the rising and falling of each stage above or below the next. A fully "Bull" trend would be exemplified by The BaseLine being greater than Stage 1, and Stage 1 being greater than Stage 2, and Stage 2 being greater than Stage 3, and Stage 3 being greater than Stage 4.

As the wave trend collapses [e.g., trend is "falling" ("Bear") or trend is "rising" ("Bull")], price will converge (Bull to Bear) or diverge (Bear to Bull) with the wave and be demonstrated on the graph as the color scheme's changing color, and the wave stages starting to rise or fall against each subsequent stage.

In the example above, we can see as price converges with the wave, Stage 1 starts to rise above the BaseLine, indicating that a trend reversal and the "bull" wave may be starting to collapse.

Depending on the degree of "collapse" against the wave, the existence of one stage rising or falling above the BaseLine may or may not indicate a action to enter or exit a trade. Each Stage of the wave trend is a support or resistance "wall" that must be broken for the collapse of the wave to complete and allow the opposing wave to manifest.

BirbicatorPRO uses several filtering mechanisms to identify ideal entry and exit conditions depending on price's relative position with the wave. This is further discussed within the "Signal System" section.

As an example, enabling the "BaseLine Trend Change Signal" within BirbicatorPRO's options demonstrates how this initial convergence of price was disregarded as a exit condition due to the force of Stage 2, 3, and 4 coming behind Stage 1 which had already gained "Bearish" bias over the BaseLine.

We see here that the Exit condition was met later, when price action failed to decrease the degree at which Stage 1 was diverging against the BaseLine (thus indicating that the overall wave was weakening).

Support and Resistance

Visually we can observe how BirbicatorPRO's Momentum Wave can be used as dynamic support and resistance. As such is commonly used within trading system's based on moving averages to define dynamic support levels,. The Momentum Wave can operate with the same consideration, providing areas where price is likely to find local support or resistance.

"Riding the Wave"

In simple terms, Wave momentum mechanics are about "Riding the Wave" or what is commonly referred to as "The Trend in your friend". Stay on the right side of the wave and and profitable trades will follow. @SignalFI_

Zooming out we can see how the Momentum Wave can be visualized as a "cushion" for price to react to. This provides valuable context for how long to enter, exit, and plan trades according to the degree of "comfort" that exists within the cushion of the wave.