Supertrend is a popular trend-following indicator that plots a single line either above or below price, indicating the current trend direction. When price crosses the Supertrend line, the line flips position and color, generating buy and sell signals. It’s widely used in Indian markets for its simplicity and effectiveness in trending conditions.
- Line below price (green) = uptrend (buy signal)
- Line above price (red) = downtrend (sell signal)
- Uses ATR to adapt to volatility
How Supertrend Works
Supertrend uses ATR to create dynamic bands:
Supertrend Calculation:
Settings: 10-period ATR, 3x multiplier
Upper Band = (High + Low)/2 + (ATR × 3)
Lower Band = (High + Low)/2 - (ATR × 3)
Example:
Average Price: ₹100
ATR (10): ₹5
Upper Band: 100 + 15 = ₹115
Lower Band: 100 - 15 = ₹85
If in uptrend: Line at ₹85 (support)
If in downtrend: Line at ₹115 (resistance)
Flip Trigger:
Price closes above ₹115 → Flips to uptrend
Price closes below ₹85 → Flips to downtrend
Quick Reference: Supertrend Signals
| Condition | Signal | Action |
|---|---|---|
| Line flips below price (green) | Buy | Enter long |
| Line flips above price (red) | Sell | Exit long / Enter short |
| Price touches line in uptrend | Support | Hold / Add |
| Price touches line in downtrend | Resistance | Hold short |
Example: Supertrend Trade
Supertrend Buy Signal:
| Day | Price | Supertrend | Color | Action |
|---|---|---|---|---|
| 1-5 | ₹95-98 | ₹102 | Red | Downtrend |
| 6 | ₹103 | Flips to ₹96 | Green | BUY |
| 7 | ₹105 | ₹97 | Green | Hold |
| 10 | ₹112 | ₹100 | Green | Hold/Trail |
| 15 | ₹108 | ₹103 | Green | Still valid |
Exit: When Supertrend flips red again.
Supertrend is a trend indicator that plots a line above or below price. Green line below means uptrend—buy. Red line above means downtrend—sell. Line flips signal trend changes. Popular for its simplicity in trending markets.
Supertrend Settings
Default (10, 3)
- 10-period ATR, 3x multiplier
- Balanced signals
- Good for swing trading
Faster (7, 2)
- More signals
- Better for day trading
- More whipsaws in ranges
Slower (14, 4)
- Fewer signals
- Catches bigger trends
- Misses early entries
Supertrend Strategies
Simple Trend Following
Buy when green, sell when red. Hold through entire trend.
With Filters
Only trade when 200 MA confirms direction. Reduces false signals.
Multiple Timeframes
Higher timeframe Supertrend for direction, lower for entries.
With RSI
Only take buy signals when RSI not overbought. Improves entries.
Supertrend Limitations
- Whipsaws in ranges – Generates losses in sideways markets.
- Lagging – Signals come after trend starts.
- Doesn’t predict – Shows current trend, not future.
- One size doesn’t fit all – Different stocks need different settings.
Common Mistakes
-
Using in ranging markets – Supertrend needs trends to work.
-
Fighting signals – Don’t hold longs when Supertrend turns red.
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Wrong settings – Adjust for stock volatility and timeframe.
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No additional confirmation – Combine with other analysis.
How JournalPlus Tracks Supertrend
JournalPlus logs Supertrend signals at entry, helping you analyze win rate and profitability of trades taken on Supertrend flips.
