Supertrend Indicator on a Live Gold Chart

What it shows

The green line under the candles is the up trend, the red line over them the down trend. Only one of them is drawn at a time, and the gap where they hand over is the flip. In an up trend the green line only moves up or sideways, which is why many traders use it as a trailing stop.

How Pravex works it out

1. Take the middle of each candle, (high + low) ÷ 2.
2. Work out the ATR: the true range of each candle, averaged over the ATR length the Wilder way, where each new value keeps most of the old average and adds a small part of the new range.
3. Upper band = middle + factor × ATR. Lower band = middle − factor × ATR.
4. The lower band may not fall while the previous close stays above it, and the upper band may not rise while the previous close stays below it. That is what makes the line step instead of wobble.
5. A close above the upper band starts an up trend and the line becomes the lower band. A close under the lower band starts a down trend and the line becomes the upper band.

Settings

Setting	Default	What changing it does
ATR Length	10	How many candles the ATR averages. A longer length makes the bands react more slowly to a sudden jump in the candles’ size.
Factor	3	How many ATRs the bands sit from the middle. A smaller factor puts the line closer to price: earlier flips, and more false ones. A larger factor gives fewer, later flips.

How traders read it

Green under the candles means the last flip was upward and no candle has closed back under the line since. Red over the candles means the opposite. A flip is a fact about the last close, not a forecast.

The distance between price and the line is worth a look. When price runs far from it, a pullback can happen without a flip. When price hugs the line, one close can turn it.

The same factor sits much further from price on 4-hour candles than on 5-minute ones, because the ATR is larger. Settings that suit one timeframe rarely suit another.

When it misleads

In a range Supertrend flips back and forth, and each flip comes after the move that caused it. The line uses the forming candle’s high, low and close, so on a live candle it can move and even flip before the candle closes; it settles at the close.

Questions and answers

What are the best Supertrend settings for gold?

There is no single best. ATR length 10 and factor 3 are where Pravex starts. Lower the factor for earlier, noisier flips, raise it for fewer and later ones, and check the result on the timeframe you trade.

Does Supertrend repaint?

Not on closed candles. On the candle still forming the line can move and flip, because it uses that candle’s high, low and close. It settles when the candle closes.

Is a Supertrend flip a buy or sell signal?

It says which side of a volatility band the price closed on. Many traders use it as a trailing stop or a trend filter rather than an entry on its own.

Why are there no weekend candles in the ATR?

Spot gold trades on the 17:00 New York day and stops at the weekend. Pravex draws only the hours gold trades, so the ATR never averages in candles that did not happen.

Related: Average True Range, Parabolic SAR, Keltner Channels, Volatility Stop, every indicator.