Supertrend Indicator: What It Is

What is Supertrend?

Supertrend is a single line that follows price on the chart. When the trend is up, the line sits below price and is usually shown in green; when the trend is down, it moves above price and turns red. When the line switches sides, the indicator is said to have "flipped".

It takes two inputs: the period over which ATR is calculated and the multiplier that sets how many ATRs away the line sits. The common setting is (10, 3): a 10-period ATR and a multiplier of 3. Because the distance widens and narrows with volatility, Supertrend behaves much like a volatility-adjusted trailing stop. The crypto technical analysis guide places it in the wider toolkit.

ATR in brief: average true range

ATR (average true range) is a volatility measure introduced by J. Welles Wilder in New Concepts in Technical Trading Systems, published in 1978. First, the true range (TR) of each bar is found as the largest of three values:

• the bar's high minus its low;
• |high − previous close|;
• |low − previous close|.

Example: with a previous close of 101, a high of 108 and a low of 102, the values are 6, 7 and 1, so TR = 7. Including the previous close stops volatility from being understated when price gaps at the open.

ATR is a Wilder-smoothed average of true ranges: ATR today = (ATR yesterday × (N − 1) + TR today) / N. ATR has no direction; it only measures how active price is.

Formula: (H+L)/2 ± multiplier × ATR

Two basic bands are calculated for each bar:

Worked example (illustrative numbers): take a bar with H = 108, L = 102, ATR(10) = 2 and a multiplier of 3. The midpoint is (108 + 102) / 2 = 105; the upper band is 105 + 3 × 2 = 111; the lower band is 105 − 3 × 2 = 99.

The basic bands are not plotted directly; they are first turned into "final" bands. The rule: in an uptrend the lower band can only move up. If the next bar's basic lower band is 100, the line rises from 99 to 100; if it is 97, the line stays at 99 (as long as the previous close has not fallen below the band). The upper band follows the mirror rule in a downtrend. This "only move with the trend" rule gives the line its trailing-stop behaviour.

How the line flips

A flip depends on where the close sits relative to the band:

• While the indicator points up (line on the lower band), a close below the lower band moves the line to the upper band and the direction turns down.
• While it points down (line on the upper band), a close above the upper band moves the line to the lower band and the direction turns up.

In the example bar, with the direction up, the line sits at 99; the direction holds as long as no close falls below 99. A close at 98 sends the line to the upper band around 111. A flip is confirmed by the bar's close; temporary intrabar spikes do not count.

How to read it: a trend-following tool, not a forecast

Supertrend does not announce a trend in advance; it follows a trend once it has been under way for a while. When reading it:

• Position: with the line below price the indicator is consistent with an uptrend; above price, with a downtrend.
• Distance: a large gap between price and the line means the move has accelerated; a narrowing gap is consistent with the trend slowing.
• As a level: the line is watched as a dynamic support and resistance level, showing the price at which the current trend reading would no longer hold.

A flip is not a "call to trade"; it is a record that the indicator has changed direction.

The timeframe changes the reading too. The same (10, 3) setting can flip several times a day on a 15-minute chart yet hold one direction for months on the daily chart. When discussing a flip, state the timeframe; short and long timeframes pointing the same way make the reading more coherent.

Limits: frequent flips in sideways markets

• Sideways markets: markets spend much of their time without a clear trend. In those phases closes cross the bands often and the indicator flips back and forth.
• Lag: the line is built from past ATR and price ranges, so it shows turns only after they happen.
• Setting sensitivity: a small multiplier (e.g. 2) keeps the line close to price and produces more flips; a large one (e.g. 4) produces fewer but later flips.
• Sudden gaps: in sharp, news-driven moves price can jump far beyond the line.

Combining with moving averages and RSI

Supertrend is not used alone. Common pairings:

• Moving average: when the direction of the 200-period average and Supertrend agree, the reading is more coherent. The difference between them is that the average is a mean of closes, while Supertrend uses a volatility-adjusted distance.
• RSI and MACD: show whether momentum supports the trend.
• Bollinger Bands and the Ichimoku Cloud: offer a second view of volatility and trend zones.
• Candlestick patterns: help judge the strength of the flip bar.

Live examples

To see the Supertrend (10, 3) value and direction on live data, look at the Bitcoin technical analysis and support and resistance levels page; the same indicator appears on the Ethereum technical analysis page.

For session-based markets, NVIDIA technical analysis and Gold (XAU) technical analysis show the same calculation. To compare Supertrend direction across many assets on one screen, use the crypto technical summary table and the stocks and commodities technical summary.