Chande Absolute Trend Strength

Description:

The Chande Absolute Trend Strength (CHATS) indicator is a breakout-friendly indicator that measures both momentum and trend persistence. CHATS can be used on any exchange, instrument type, and charting interval. The indicator combines 14-day RSI and normalized 100-day returns, and the breakout of each bar beyond the 100-day price channel, and 25-,50-, 75-, and 100-day Bollinger bands.

Input Parameters:

Threshold: The current strength of the trend. By default, it is set to a value of 70, which sets its ‘strong trend’ reading above +70 and its ‘weak trend’ reading below -70.

Use Cases:

Trend Confirmation: CHATS is widely used by traders to confirm the strength of a trend. Rising CHATS values indicate increasing trend strength, while declining values may suggest weakening momentum. This confirmation can help traders make more informed decisions about entering or exiting positions in line with the prevailing trend.
Entry and Exit Signals: Traders often utilize CHATS to identify potential entry and exit points in the market. When CHATS is rising and above a certain threshold, it may signal a robust trend, providing a favorable opportunity to enter a position. Conversely, a decline in CHATS from high levels may indicate a weakening trend, prompting traders to consider exiting their positions.
Trend Reversal Signals: CHATS can also serve as a valuable tool for detecting potential trend reversals. Abrupt changes in CHATS direction, especially after an extended period of strength or weakness, can alert traders to the possibility of a trend reversal. By monitoring CHATS alongside other indicators and price action, traders can better anticipate shifts in market direction and adjust their strategies accordingly.

This feature can be used in: