Forex traders use a variety of tools to help them trade, most of which help identify break and support lines and entry and exit points. These technical tools are called “indicators” and there are hundreds available across trading platforms.
At Valutrades we offer seven different custom indicators for our MT4 platform to help you spot setups and become a more informed trader.
Double Top / Bottom
There simply is no chart pattern more common than a Double Top or Double Bottom. For a Double Top indicator to be triggered it requires two peaks that are more or less even in price, equal distance in terms of time between highs, and feature volume decreases on the second top.
What a Double Top indicator can signify is reversal or break through potential, as the symbol has moved back and forth in price within the defined range. Acting as the complete mirror image of the Double Top pattern is the Double Bottom, with the difference being that it reflects a pattern that is heading in the opposite direction. Either way, what you can be sure of is that an indicator of this type will highlight Double Tops and Double Bottoms within an active chart.
Inside Outside Bars
Inside Bars and Outside Bars require two completed candles to present within a chart. When an Inside Bar appears, what it represents is a direct play on short-term market sentiment. Traditionally, it is characterised by the inside candle’s price action being completely covered from price action of the day before and sets up the potential for an explosive break out.
In terms of pure excitement, Outside Bar indicators (sometimes listed as an Engulfing Pattern) certainly carry plenty of weight. What it represents is a single bar formation that can appear at any time, with longer timeframes working to increase the potential reliability of the signal. Movement after an outside bar can clearly represent the beginning of a trend.
Three Strike Pattern
Three Strike Patterns – which are sometimes listed as Three Line Strikes and in certain circumstances Fooling Three Soldiers - are patterns that will occur during an already well-established trend. What a Three Strike Pattern indicator represents on an MT4 chart is a resting period, but not in the normal sense.
Unlike usual resting periods, a Three Strike Pattern can occur all in one day. When a Three Strike Pattern indicator appears what a trader can take away from it is that the related trend is set to remain active.
Support Resistance Lines
Support and Resistant Lines are known to have deep roots within forex technical analysis, as they are an indicator that many top traders choose to lean on. What such pattern represents is the key juncture where supply and demand meet. These lines are going to be tremendous tells when it come the rising popularity (or lack thereof) when it comes to a particular symbol.
Identification of key Support and Resistance Lines indicators is widely considered to be an essential ingredient to conducting consistently successful technical analysis, hence why when this indicator appears it should seldom be ignored.
RSI CCI Divergence
The large percentage of investors look towards both the Relative Strength Indicator (RSI) and the Commodity Channel Index (CCI) consistently, as both represent versatile momentum oscillators, along with being leading methods of identifying overbought and oversold conditions.
While there is no denying that the levels addressed can aid a trader, RSI CSI Divergence is also a significant indicator to be aware of. Its usefulness comes about through the fact that it can – as the name suggests – help you identify when the RSI and CSI start to diverge and can be more reliable than looking at each indicator separately.
Doji Patterns are common finds within the world of trading, hence the importance of an indicator that is used in conjunction with an MT4 chart. This comes about when a symbols opening and closing price remain pretty much even for the given time period.
The Doji Pattern indicator holds key significance in the eyes of those that favour technical analysis, as it works to signify a potential reversal. What it is characterised by is a small length – that equates to a smaller than average trading range, with it actually resembling a “plus” sign.
Hammer Patterns occur whenever a security or commodity trades at a noticeably lower price that its opening figure, with it rallying latter that same day, ideally to close either near or above its opening price.
The reason behind the term “Hammer” comes from the shape of the candlestick, as the body is at least half the size of the tail or wick. Those with an open MT4 chart should certainly understand that when a Hammer Pattern indicator is triggered, it will represent a possible period of reversal.