The Guppy indicator is a technical analysis tool that combines multiple moving averages to provide a visual representation of the market trend and potential reversals. It was developed by Daryl Guppy, an Australian trader and author.

The Guppy indicator consists of two groups of moving averages, known as the short-term and long-term moving averages. The short-term group typically includes three moving averages, while the long-term group includes three or five moving averages.

The short-term moving averages are calculated based on shorter timeframes, such as 3, 5, 8, or 10 periods, while the long-term moving averages are calculated based on longer timeframes, such as 30, 35, 40, 45, or 50 periods.

The concept behind the Guppy indicator is to identify the interaction between the short-term and long-term moving averages to determine the strength and direction of the prevailing trend. It helps traders visualize the relationship between traders who are more focused on short-term moves (represented by the short-term moving averages) and those who are more focused on longer-term trends (represented by the long-term moving averages).

When the short-term moving averages are tightly grouped together and moving upward, it indicates a strong bullish trend. Conversely, when the short-term moving averages are tightly grouped together and moving downward, it indicates a strong bearish trend. The wider the gap between the short-term and long-term moving averages, the stronger the trend.

Reversals or changes in the trend can be identified when the short-term and long-term moving averages begin to converge or cross over each other. A bullish reversal occurs when the short-term moving averages cross above the long-term moving averages, while a bearish reversal occurs when the short-term moving averages cross below the long-term moving averages.

Traders often use the Guppy indicator in conjunction with other technical analysis tools and indicators to confirm trading signals and make informed trading decisions.