Trend reversal indicator in mt4 consists of two moving averages that signal a change of price trend. It indicates whether the recent timeframe trend is bullish or bearish, So we can trade only in the direction of the main trend.
This signal indicator will open in a separate window on MetaTrader 4 platform.
How to identify trend reversal?
Mt4 trend reversal indicator is made up of two moving averages
- Fast moving average
- Slow moving average
The fast-moving average reacts faster to the changes of the market while the slow-moving average reacts slower to the reactions of the market.
There is a proper reason behind the use of these two types of moving averages. Because fast-moving average will give many false signals whereas slow-moving average will not generate false signals but it takes more time.
In this indicator, a fast-moving average generates price trend reversal signal and a slow-moving average confirms the direction of a trend reversal.
Bullish trend
If the fast moving average is above the slow moving average then the price trend will be bullish.
Bearish trend
If the fast moving average is below the slow moving average then the price trend will be bearish.
How to trade using the mt4 trend reversal indicator?
Signals are generated based on the crossover of moving averages.
Buy signal
When the fast moving average crosses the slow moving average from the lower side then a buy signal is generated.
Sell signal
When the fast moving average crosses the slow moving average from the upper side then a sell signal is generated.
The Bottom Line
Trend reversal indicator is the best mt4 indicator to identify a trend. During the ranging market condition, the slop of MAs will decrease and it will move sideways.
This indicator will not work effectively during ranging market conditions due to sideways movement of moving average and price.
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