The Supertrend is a trend-following overlay that draws a single line that flips sides of price as the trend changes. It is built from price and the Average True Range (ATR), so it adapts to volatility: the line sits further from price when the market is choppy.
How to read it
When the line is below price and green, the trend is up; when it flips above price and red, the trend is down. Because it uses ATR, it gives price room to breathe in volatile conditions and hugs closer when things calm down, which makes it a convenient trailing stop.
Its honest weakness is the same as every trend tool: in a sideways market the Supertrend flips back and forth constantly, producing a run of small losses. It shines when a market trends cleanly and frustrates when it ranges — so pair it with a check that a trend actually exists.
- Line below price = uptrend; line above price = downtrend.
- Built from ATR, so it adapts to changing volatility.
- Doubles as a trailing stop that follows the trend.
- Whipsaws badly in ranges — best confined to trending markets.
The Supertrend flips with the trend and works as a volatility-based trailing stop — excellent in clean trends, unreliable in choppy ranges.