Simple moving averages (SMAs) with different lengths are the building blocks of the rainbow oscillator. These SMAs are then stacked on top of one another.
The visual impression that these numerous SMAs produce is where the term "rainbow" originates.
Features of the oscillator with rainbow colors Multiple uninterrupted passages: The indicators are made up of several SMAs, which usually vary in length from two periods to ten periods.
Code of Color: The moving average appears as a rainbow on the chart because each one is given a distinct color.
Overview of trends: A strong trend is indicated if the moving averages converge on a steep slope with short peak periods. A trend reversal or a market consolidation is indicated when moving averages diverge or converge.