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.

In forex, a “vibrating rainbow” is an informal term used by traders to describe a set of multiple moving averages plotted together on a chart. These moving averages are usually colored differently, forming a rainbow-like appearance that seems to “vibrate” as price fluctuates. The constant movement reflects market volatility and momentum changes in real time. When the lines are tightly grouped and moving smoothly, it may indicate a strong trend, while scattered and crossing lines suggest market indecision or consolidation. Traders use this visual tool to identify entry and exit points, trend direction, and potential reversals. Although not a standard technical indicator, the vibrating rainbow helps simplify complex price action into an easy-to-read, dynamic visual guide for decision-making.