The Value Charts Indicator is a powerful technical analysis tool that helps traders visualize the relative value of an asset’s price compared to its historical price range. This innovative indicator helps traders identify overbought and oversold conditions and potential entry and exit points for trades. In this article, we will discuss the definition, working, best settings, and how to trade using the Value Charts Indicator for MT5.
Value Charts is a unique technical analysis indicator that plots an asset’s price relative to its historical price range to determine its current value. The indicator measures the price of an asset compared to its average price over a specified period and presents this information in an easy-to-read chart format. This allows traders to quickly assess whether an asset is overbought, oversold, or trading within a fair value range.
The Value Charts Indicator calculates the relative value of an asset’s price by comparing it to its historical price range over a specific period. The indicator then plots this value on a separate chart below the main price chart, with five different value levels ranging from significantly undervalued to significantly overvalued.
The five value levels are:
- Significantly undervalued (dark blue)
- Moderately undervalued (light blue)
- Fair value (white)
- Moderately overvalued (yellow)
- Significantly overvalued (red)
Traders can use these value levels to identify potential buying or selling opportunities based on the current value of the asset.
The default settings for the Value Charts Indicator in MT5 are:
- Period: 5
- Price: Close
These settings can be adjusted to suit the trader’s preferences and trading style. Increasing the period will result in a smoother chart, while decreasing the period will make the indicator more responsive to price movements. The price setting can also be changed to reflect different price data, such as open, high, low, or median prices.
How to Trade with the Value Charts Indicator
Overbought and Oversold Conditions
One of the primary methods of trading with the Value Charts Indicator is to identify overbought and oversold conditions. When the indicator displays an asset as significantly overvalued (red), traders can consider opening short positions or closing long positions, as a price reversal may be imminent. Conversely, when the indicator displays an asset as significantly undervalued (dark blue), traders can consider opening long positions or closing short positions, as the price may be due for a rebound.
Another trading strategy using the Value Charts Indicator is to look for divergences between the indicator and the asset’s price. Bullish divergence occurs when the price forms a lower low, but the Value Charts Indicator forms a higher low, indicating potential upward momentum. Bearish divergence occurs when the price forms a higher high, but the Value Charts Indicator forms a lower high, signaling potential downward momentum.
Combining with Other Indicators
To increase the effectiveness of the Value Charts Indicator and filter out false signals, consider combining it with other technical analysis tools such as support and resistance levels, trendlines, or additional momentum oscillators like the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD).
The Value Charts Indicator for MT5 is an innovative and powerful tool that can help traders identify potential market opportunities and improve their trading performance. By incorporating the Value Charts Indicator into your trading strategy, along with other technical analysis tools and sound risk management practices, you can better understand the relative value of an asset’s price and make more informed trading decisions. Download the Value Charts Indicator for MT5 for free today and start enhancing your trading strategy.Download indicator