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Supertrend

In short

Trend-following indicator using ATR to set dynamic support/resistance

Supertrend draws a line that flips above or below the price to show the trend. When price is above the line (green), you're in an uptrend. When price falls below (red), the trend has reversed.

Supertrend uses ATR multiplied by a factor (typically 3) added to/subtracted from the midpoint to create dynamic levels. It flips direction when price crosses these levels. Less lag than moving averages in trending markets.

Formula

Supertrend = (High+Low)/2 ± ATR(10) × multiplier

Related concepts

  • ATR (Average True Range) — ATR tells you how much a stock typically moves in a day. If a $100 stock has ATR of $3, it moves about 3% daily. High ATR means volatile; low ATR means calm. Useful for setting stop-loss distances.
  • ADX (Average Directional Index) — ADX tells you how strong a trend is on a scale of 0–100. Above 25 means there's a real trend happening. Below 20 means the market is choppy with no clear direction.
  • Exponential Moving Average (EMA) — Like a regular moving average but it pays more attention to recent prices. If a stock just had a big move, the EMA reacts faster than the SMA. Traders use EMA crossovers to spot trend changes early.
  • Moving Average Crossover — The golden cross (50-day crosses above 200-day MA) is one of the most famous buy signals. The death cross (50-day crosses below 200-day) is a sell signal. It's simple but followed by many professional traders.