Display Type: Overlay | Complexity: Beginner to Intermediate | Best For: Trend Following, Dynamic Support/Resistance, Entry/Exit Signals
SuperTrend is a popular trend-following indicator that combines price action with volatility analysis to provide clear, visual trend signals. Developed by Olivier Seban, this indicator plots dynamic support and resistance lines that adapt to market volatility, making it easier for traders to identify trend direction and potential entry/exit points.
What is SuperTrend? #
SuperTrend is an overlay indicator that appears directly on the price chart as a line that changes color and position based on trend direction. When the trend is bullish, SuperTrend plots below the price (typically in green), acting as dynamic support. When the trend is bearish, it plots above the price (typically in red), acting as dynamic resistance.
The indicator uses Average True Range (ATR) to calculate volatility-adjusted levels, making it more responsive to market conditions than static support and resistance lines. This adaptive nature helps filter out market noise while providing reliable trend signals across different timeframes and market conditions.
Key Uses: #
- Trend Identification: Clear visual representation of current trend direction
- Dynamic Support/Resistance: Adaptive levels that adjust to volatility
- Entry/Exit Signals: Color changes indicate potential trade opportunities
- Stop Loss Placement: Logical stop levels based on trend structure
- Trend Continuation: Identify pullback opportunities within trends
- Risk Management: Volatility-based position sizing and stops
How SuperTrend Works #
SuperTrend Formula: #
Basic SuperTrend Calculation:
Upper Band = (High + Low) / 2 + (Multiplier × ATR) Lower Band = (High + Low) / 2 – (Multiplier × ATR)
SuperTrend Logic:
- If Close ≤ SuperTrend[previous]: SuperTrend = Upper Band
- If Close > SuperTrend[previous]: SuperTrend = Lower Band
Default Parameters: #
- ATR Period: 10
- Multiplier: 3.0
- Source: High, Low, Close (HL2 = (High + Low) / 2)
Trend Determination: #
Bullish Trend:
- Price above SuperTrend line
- SuperTrend line below price (support)
- Line typically colored green
Bearish Trend:
- Price below SuperTrend line
- SuperTrend line above price (resistance)
- Line typically colored red
Signal Generation: #
- Buy Signal: Price closes above red SuperTrend line (trend change to bullish)
- Sell Signal: Price closes below green SuperTrend line (trend change to bearish)
SuperTrend Characteristics #
Adaptive Nature #
SuperTrend adjusts to market volatility through ATR:
- High Volatility: Wider bands, fewer false signals
- Low Volatility: Tighter bands, more responsive signals
- Trend Strength: Distance between price and line indicates momentum
Visual Clarity #
- Color Coding: Immediate trend recognition
- Price Position: Above/below relationship shows bias
- Slope Direction: Line slope indicates trend acceleration/deceleration
Lagging vs. Leading #
- Lagging Aspect: Based on historical price and ATR data
- Leading Aspect: Provides dynamic levels for future price action
- Balance: Good compromise between accuracy and timeliness
Standard SuperTrend Settings #
Default Configuration: #
- ATR Period: 10
- Multiplier: 3.0
- Calculation: (High + Low) / 2
Settings by Trading Style: #
| Trading Style | ATR Period | Multiplier | Characteristics | Best For |
|---|---|---|---|---|
| Scalping | 7 | 2.0-2.5 | Very responsive | Quick trends |
| Day Trading | 10 | 3.0 | Standard setting | Intraday trends |
| Swing Trading | 10-14 | 3.0-4.0 | Balanced approach | Multi-day trends |
| Position Trading | 14-21 | 4.0-5.0 | Smooth signals | Long-term trends |
Market-Specific Adjustments: #
Forex Markets:
- ATR: 10-14, Multiplier: 2.5-3.5
- Consider session volatility differences
Stock Markets:
- ATR: 10, Multiplier: 3.0 (standard)
- Adjust for individual stock volatility
Crypto Markets:
- ATR: 7-10, Multiplier: 2.0-3.0
- Higher volatility requires lower multipliers
Commodity Markets:
- ATR: 10-14, Multiplier: 3.0-4.0
- Adapt to contract specifications
Trading Strategies #
1. Basic SuperTrend Strategy #
Setup: Use SuperTrend signals for trend following Buy Signal:
- Price closes above red SuperTrend line
- Enter long position at next candle open
- Stop loss: Below SuperTrend line
Sell Signal:
- Price closes below green SuperTrend line
- Enter short position at next candle open
- Stop loss: Above SuperTrend line
Exit Strategy:
- Opposite SuperTrend signal occurs
- Price breaks SuperTrend line decisively
2. SuperTrend Pullback Strategy #
Setup: Enter on pullbacks to SuperTrend line in trending markets Long Entry:
- Uptrend confirmed (green SuperTrend)
- Price pulls back to touch SuperTrend line
- Bullish rejection candle at SuperTrend support
Short Entry:
- Downtrend confirmed (red SuperTrend)
- Price rallies to touch SuperTrend line
- Bearish rejection candle at SuperTrend resistance
Risk Management:
- Stop: Beyond SuperTrend line by 1 ATR
- Target: Previous swing high/low
3. Multiple SuperTrend System #
Setup: Use multiple SuperTrend indicators with different settings Configuration:
- Fast SuperTrend: ATR 7, Multiplier 2.0
- Medium SuperTrend: ATR 10, Multiplier 3.0
- Slow SuperTrend: ATR 14, Multiplier 4.0
Signal Hierarchy:
- All three aligned = Strong trend signal
- Two aligned = Medium confidence
- Divergence = Caution/trend change
Entry Rules:
- Enter when fast and medium align
- Exit when fast SuperTrend changes color
4. SuperTrend Breakout Strategy #
Setup: Use SuperTrend to confirm breakouts from consolidation Identification:
- SuperTrend line relatively flat (consolidation)
- Price oscillating around SuperTrend
- Decreasing volatility (narrowing ATR)
Entry Triggers:
- Strong breakout above/below consolidation
- SuperTrend color change confirmation
- Volume increase on breakout
Targets: Based on consolidation height or ATR multiples
Combining SuperTrend with Other Indicators #
SuperTrend + RSI #
Strategy: Filter SuperTrend signals with momentum Buy Setup:
- SuperTrend bullish (green)
- RSI oversold (below 30) then rising
- Entry on RSI above 30 with price above SuperTrend
Sell Setup:
- SuperTrend bearish (red)
- RSI overbought (above 70) then falling
- Entry on RSI below 70 with price below SuperTrend
SuperTrend + Moving Averages #
Trend Confirmation System:
- 20 EMA for short-term bias
- 50 EMA for medium-term trend
- SuperTrend for entry timing
Rules:
- Trade only when all indicators align
- SuperTrend provides precise entry/exit points
- MAs provide overall trend context
SuperTrend + MACD #
Momentum and Trend Alignment:
- MACD for momentum divergences
- SuperTrend for trend direction
- Enter when both indicators agree
Signal Quality:
- MACD bullish + Green SuperTrend = High probability long
- MACD bearish + Red SuperTrend = High probability short
SuperTrend + Volume #
Volume Confirmation:
- Strong SuperTrend signals with high volume
- Weak volume on SuperTrend changes = Lower confidence
- Volume spikes confirm trend continuation
Market Condition Analysis #
Trending Markets #
SuperTrend Behavior:
- Clear color consistency (long green/red stretches)
- Price staying on one side of line
- Smooth line trajectory
Trading Approach:
- Follow SuperTrend signals aggressively
- Use pullback strategy for entries
- Trail stops with SuperTrend line
Ranging Markets #
SuperTrend Behavior:
- Frequent color changes
- Price whipsawing around line
- Choppy line movement
Trading Approach:
- Reduce position sizes
- Wait for clearer trend establishment
- Consider range-bound strategies instead
Volatile Markets #
SuperTrend Behavior:
- Wider distance between price and line
- Fewer signal changes
- Larger price swings
Trading Approach:
- Use wider stops
- Reduce leverage
- Focus on major trend changes only
Advanced SuperTrend Techniques #
SuperTrend Bands #
Construction:
- Upper SuperTrend: Higher multiplier (e.g., 4.0)
- Lower SuperTrend: Lower multiplier (e.g., 2.0)
- Creates a channel for trend analysis
Application:
- Trade within the SuperTrend channel
- Channel breaks indicate strong moves
- Use for position sizing guidance
Multiple Timeframe SuperTrend #
Strategy: Align SuperTrend signals across timeframes
- Higher Timeframe: Overall trend direction
- Lower Timeframe: Precise entry timing
- Alignment: Increases signal probability
Example:
- Daily SuperTrend: Bullish (trend direction)
- 4-Hour SuperTrend: Bullish (confirmation)
- 1-Hour SuperTrend: Entry timing
SuperTrend Divergences #
Price vs. SuperTrend:
- Price making higher highs, SuperTrend lower highs
- Price making lower lows, SuperTrend higher lows
- Suggests potential trend weakness
Common SuperTrend Mistakes #
Mistake 1: Trading Every Signal #
Problem: Following all SuperTrend color changes Solution: Filter signals with market context and other indicators
Mistake 2: Wrong Parameter Settings #
Problem: Using inappropriate ATR periods or multipliers Solution: Backtest settings for your specific market and timeframe
Mistake 3: Ignoring Market Context #
Problem: Trading SuperTrend signals without considering overall market Solution: Always check higher timeframe trends and key levels
Mistake 4: Poor Risk Management #
Problem: Not using proper stops with SuperTrend signals Solution: Always set stops beyond SuperTrend line with buffer
SuperTrend Settings by Timeframe #
| Timeframe | ATR Period | Multiplier | Signal Quality | Trading Style |
|---|---|---|---|---|
| 1-minute | 7 | 2.0 | High frequency | Scalping |
| 5-minute | 10 | 2.5 | Active trading | Day trading |
| 15-minute | 10 | 3.0 | Balanced | Intraday swings |
| 1-hour | 10 | 3.0 | Standard | Swing trading |
| 4-hour | 14 | 3.5 | Smooth | Position entries |
| Daily | 14 | 4.0 | Very smooth | Long-term trends |
| Weekly | 21 | 5.0 | Major trends | Investment decisions |
SuperTrend Optimization #
Backtesting Considerations: #
- Test different ATR periods (7-21)
- Vary multipliers (2.0-5.0)
- Consider market-specific adjustments
- Factor in transaction costs
Performance Metrics: #
- Win rate vs. profit factor
- Maximum drawdown periods
- Signal frequency vs. profitability
- Risk-adjusted returns
FAQs #
What are the best SuperTrend settings? #
The standard settings (ATR 10, Multiplier 3.0) work well for most situations. However, optimal settings vary by market and timeframe. Shorter timeframes might use multipliers of 2.0-2.5, while longer timeframes might use 3.5-4.0.
How do you use SuperTrend for intraday trading? #
For intraday trading, use shorter ATR periods (7-10) with moderate multipliers (2.5-3.0). Focus on clear trend changes, avoid trading during lunch hours when trends weaken, and always use the indicator in conjunction with volume and key support/resistance levels.
Can SuperTrend be used alone for trading? #
While SuperTrend can generate profitable signals alone, it’s more effective when combined with other indicators. Use it with RSI for momentum confirmation, moving averages for trend context, or volume analysis for signal validation.
What’s the difference between SuperTrend and moving averages? #
SuperTrend adapts to volatility using ATR, making it more responsive to market conditions than static moving averages. It also provides clearer visual signals through color changes and acts as dynamic support/resistance rather than just trend direction.
How do you set stop losses with SuperTrend? #
Place stops just beyond the SuperTrend line (typically 0.5-1 ATR beyond). For long positions, stops go below the green SuperTrend line. For short positions, stops go above the red SuperTrend line. Trail stops as the SuperTrend line moves favorably.
Why does SuperTrend give false signals? #
False signals occur mainly in ranging markets when price oscillates around the SuperTrend line. High market volatility, news events, and gap openings can also cause whipsaws. Filter signals with volume, support/resistance levels, and higher timeframe trends.
Tips for Success #
- Match Settings to Market: Adjust ATR period and multiplier based on asset volatility and trading timeframe
- Confirm with Volume: Strong SuperTrend signals should have volume confirmation for higher reliability
- Use Multiple Timeframes: Check higher timeframe SuperTrend for overall trend context before trading
- Respect the Line: Treat SuperTrend as dynamic support/resistance—price reactions matter
- Filter Choppy Markets: Avoid trading SuperTrend signals during obvious ranging conditions
- Trail Stops Properly: Use SuperTrend line as trailing stop, but only move in favorable direction
- Combine with Price Action: Look for candlestick patterns at SuperTrend levels for better entries
- Monitor ATR Values: High ATR periods may require adjusted expectations and wider stops
- Backtest Thoroughly: Test your SuperTrend strategy across different market conditions before live trading
- Stay Disciplined: Don’t override SuperTrend signals based on emotions or outside opinions
Conclusion #
SuperTrend stands out as one of the most practical and visually clear trend-following indicators available to traders. Its combination of price action and volatility analysis creates a robust framework for identifying trend direction while providing dynamic support and resistance levels that adapt to changing market conditions.
The indicator’s strength lies in its simplicity and visual clarity—the color-coded lines make trend identification immediate and reduce analysis paralysis. When combined with proper risk management and complementary indicators, SuperTrend becomes a powerful tool for both novice and experienced traders seeking reliable trend signals.
Success with SuperTrend comes from understanding its adaptive nature and matching its settings to your trading style and market conditions. While it performs exceptionally well in trending markets, recognizing when markets are ranging and adjusting your approach accordingly is crucial for long-term profitability.
Remember: SuperTrend is a trend-following tool that works best when trends are present. Use it to ride trends rather than predict them, always within the context of comprehensive market analysis and sound risk management principles. The indicator’s true value emerges when you learn to trust its signals while respecting the dynamic support and resistance levels it provides.