This article will provide traders with definitions of support and resistance, and explain how to identify these price areas on a chart. It will also offer guidance on how to incorporate support and resistance levels into an overall trading strategy.
Support And Resistance Indicators MT4
The starting point for many traders when building a trading strategy is to identify key price levels where a stock, currency pair or commodity may find support or resistance. Key price levels are where a lot of traders will sit and watch the market in the hope that it reaches their level so they can trade it. This means that there is often a great deal of volume traded at these price levels which makes them significant for technical analysis.
What is Support?
The term support describes the tendency for the price of an asset to stop falling and rebound upwards after hitting a certain level. This level is determined by analyzing historical data and identifying the lowest points reached in previous price movements. To put this in context, let’s take business hours as an example:
In order to define what we mean by “business hours,” we need to establish what time work begins each day, what time it ends, how long lunch breaks should be and what days are not considered business hours (i.e weekends). The same principle applies to support;
How to Use?
It is very easy to use support resistance indicator mt4 platform and provides a great Visualization of the Price Levels.
The indicator works perfectly on any timeframe and can be used on multiple currency pairs. You can also use it to draw Support and Resistance levels on your Forex charts, you just need to begin with a clear chart where no other technical indicators are installed.
The indicator can be used in two modes:
1 – Detecting Current Support and Resistance levels
2 – Drawing previous Support and Resistance levels
The indicator automatically detects the best point where the price reverses during its historical data. It also shows you the Current Support and Resistance levels as soon as they appear. The algorithm above is then running every few seconds to update the current prices, so you will always have the most recent support and resistance levels while trading Forex.
A look into the indicator’s strengths and weaknesses.
The MT4 Trend Indicator is an indicator that shows the current trend of the market. This can be used by all traders to determine the current direction of a currency pair. The indicator is well known for its use of averages and its application of the relative strength index (RSI) in order to determine how strong or weak a currency pair is moving. Check out FxPro MT4 review on Traders Union website.
The indicator can be used in conjunction with other indicators as part of a trading strategy, or simply as a way of checking to see if one might want to enter into an existing trade.
Strengths:
The creators claim that if you follow their signals you will make a profit in 90% of your trades, which is very high, but they are able to achieve it with a very simple strategy that uses only one indicator. The signal is generated when all four lines of the indicator cross at the same time. It is easy to learn and easy to use, the entry and exit points are clearly marked on the chart. A good thing about this indicator is that it does not repaint, so you do not have to wait for the price to move before taking your trade. The creators also mention that their indicator works well on all currency pairs, including gold. You can also apply it to multiple time frames from 1 minute to daily charts, although higher time frames generally give better results.
Weaknesses:
The first problem is that it does not take into consideration any support or resistance areas or trend lines, which is a big part of technical analysis. It only uses one indicator and gives no confirmation from other indicators or sources of information
In The End
The support resistance indicator MT4 is useful to understand and analyze the behaviour of a market, find divergences, trend change and identify levels of support and resistance that provide signals of market entry with specific orders to open and close before reaching part of the trend.
