NAHILO is one of the indicators in my market model. This post will explain why I included this indicator in my model. This indicator is powerful and can provide amazing signals.
Here’s how I use the signal:
- To track buy signals
- To track sell signals
- To identify bullish and bearish divergences
- To identify break outs and break downs
The chart below depicts all of the major buy signals in the last 2.5 years. Several important observations:
- When the stock market is in accumulation mode (2017 and most part of 2018), you can always use the buy signals to increase your long exposure. These buy signals provide good risk-reward setups.
- When the market is in the distribution mode (end of 2018), you can use the buy signals to cover the short positions and play the counter-trends
Sell Signals, Bearish Divergences and Bearish Breakdowns
The indicator is especially useful ‘predicting’ sell signals. The chart below shows all of the major sell signals in the last 2 years. Please note the following:
- Sell signals are much stronger when there is a bearish divergence
- Sell signals are much stronger when the indicator is breaking down from the ‘triangle’ formations
The 2018 top was formed on all of these bearish developments.