Parabolic SAR

Parabolic SAR provides a useful tool for catching new trends early, offering excellent buy and sell signals

• The Parabolic SAR (stop and reverse) is a trend-following system that sets "stop-losses."
• It works well in trending markets, but tends to whipsaw during non-trending, sideways phases.
• A parabola below the price is generally bullish.
• A parabola above the price is generally bearish.

Signals

The Parabolic SAR is an outstanding indicator for providing exit points - offering sell signals when the parabola moves above the price. Buy signals are generated when the parabola falls below the price. Of course, these signals need to be confirmed by the price action itself and other, complementary indicators.

It is always useful to examine different time periods; using daily, weekly and monthly charts.