CIT Bars

CIT Bars are designed to eliminate noise from random price moves, and provide a novel visual approach to defining trend. After Japanese candlesticks gained popularity in technical analysis, they were quickly followed by the introduction of additional Japanese charting techniques such as Renko, Kagi, and Heikin-Ashi. Although they all strive to visually improve our perception of the bullish and bearish trends driving markets, they also pose some challenges. Interpreting candlesticks and remembering the myriad of bullish and bearish formations can be demanding. Renko and Kagi lack the element of time, and along with Heikin-ashi suffer from additional problems such as delayed reaction to price changes. To remedy these problems we’ve developed the CIT Bars indicator. The goal was to create a multipurpose tool that is simple to interpret, yet performs several tasks without cluttering the chart space and without leading to analysis paralysis. First of all, we were striving for simplicity and clarity. This feature of CIT Bars becomes immediately obvious if you compare it to a candlestick chart.

Unlike Heikin-Ashi charts, where one can lose track of the real price, the CIT Bars indicator works seamlessly with any type of price chart. To avoid crowding the screen, however, it is best to use it with a line chart.

The ability of the CIT Bars to be displayed along with price allows the user to see hidden support/resistance levels which can serve as a trigger point for initiating long/short trades or for setting up stop-loss levels.

Another useful property of the CIT Bars indicator is the fact that the bars tend to get longer when the trend gains strength, and shorter when the trend weakens or is about to end. This narrowing of CIT Bars should be interpreted as an early warning signal that the trend is weakening and is likely to change. With the latest update, the narrowing of the bars below a user defined threshold will add yellow background color. If the trend doesn't reverse after such a narrowing, and the appearance of the yellow marker, that's usually a very bullish signal, and marks the halfway point of the trend underway.

Users can change the default settings from the Format box:

In summary, the CIT Bars indicator combines elements of momentum detection and trend following, making it an ideal tool for swing and trend traders alike.