4Period_RSI_Arrows Indicator For MT4
The 4Period_RSI_Arrows Indicator For MT4 is a unique technical analysis tool that combines Relative Strength Index (RSI) plotted on four different time frames (5 Min, 15 Min, 30 Min, 60 Min) to generate buy and sell signals. The signals are triggered as soon as prices reverse from defined oversold and overbought levels. According to the indicator code, the oversold level is marked as 38 and overbought zone is set at 62. The 4Period_RSI_Arrows Indicator For MT4 plots an upward pointing arrow to signal a long trade, and a downward pointing arrow to suggest a short trade. The indicator is prone to generate too many false trades during highly trending market phases. During such times, traders should avoid opening positions against the broader market trend.
Trading ideas with the SignalTable Indicator For MT4
The four period relative strength index indicator evaluates the RSI data from four time frames - hence the name 4Period RSI. These time frames are namely the 5-minute, 15-minute, 30-minute, and the 60-minute time frame.
4Period_RSI_Arrows Indicator For MT4 - Colorful RSI Arrows
With this indicator we are able to detect crucial turning points as shown by the indicator from four different time frames on one chart as shown in the image below.
With reference to the image above, you can see that the chart is populated with different colored arrows. At first glance, this may be an overwhelming or daunting sight because of the many arrows being displayed. The idea is simply to focus on the colors of the arrows. There is a customizable color legend or identifier whereby you can choose which color to represent which time frame. For the 5-minute chart, I went with magenta arrows, for the 15-minute chart we are using orange arrows. The 30-minute and 60-minute charts have a medium orchid and red arrows respectively.
This means that both sell and buy signals on each time frame are represented by the same color - buy and sell signals on the 5-minute chart are indicated to us using magenta arrows.
4Period_RSI_Arrows Indicator For MT4 - Sell Signal
With the color settings made and the basic operation of the 4Period RSI indicator specified, we can now start looking for various signals. There are plenty of options we could explore but for this exercise, we shall just touch on a few trading examples so that you can get the gist of how to apply this indicator to your own trading as shown in the image below.
Focus on the higher timeframe arrows and use the small time frame arrows as your signal to enter the market. This method of trading simply applies to the 5-minute and the 15-minute timeframes. These two charts are the small timeframes on which we enter the market. So if I am trading on the 15-minute chart then the arrows of the 30-minute or the 60-minute chart need to be aligned in preparation for the actual entry on the 15-minute chart on which the arrows also have to line-up with the higher time frames.
So what I would do is wait for a bullish candle to form and then there must be two downward-facing arrows above this bullish candle. But it must be one of those bullish candles that come in the form of a pin bar with a long wick above it to show a hint of bullish exhaustion which could lead to a bearish turn around in the market. Remember the red arrow is the 60-minute RSI turning point and the magenta arrow is the 5-minute RSI turning point.
So when I have these two downward-facing magenta and red arrows above the bullish candlestick it means that the market could be turning around any time soon. At first, this might seem a bit risky for some so what you could do is maybe wait for two more arrow signals (red and magenta downward facing arrows) to appear on your screen. This is a precautionary measure to take in case you need more confirmation to show you that the market will make a bearish reversal. If you are trading this setup on the fifteen-minute chart then you could yield up to 60 pips on one winning trade. However, there is no need to be greedy.
You can simply just capitalize on 20 pips and close your trade thereafter. Once that is done then you can proceed on by looking for the next trading opportunity which fits the same criteria if it is a sell trade and if it is a buy trade then obviously the bicolor arrows need to appear below a bearish candlestick which is of a shape that hints bearish exhaustion in a preceding downtrend.
4Period_RSI_Arrows Indicator For MT4 - Buy Signal
In the previous example we identified a sell signal which met our bi-color arrow criteria whereby we required downward-facing arrows to appear above a candlestick when the market is in a retail or premium price level. In the next example we will be doing the opposite. We need to identify upward facing arrows (red and magenta) to appear in a wholesale price zone so that we position ourselves for the upward or bullish move as shown in the image below.
In our next trading example we see that there was red and magenta upward-facing arrow signal identified. In fact, there were three in the row. The fact that we had three consecutive signals of this nature strengthened our case to go long. Furthermore, it is also fitting for those traders who prefer to trade with two more signal confirmations before they officially enter the market.
The initial signal appeared on a bearish Doji candlestick. This is a classic example of bearish exhaustion in a downtrend. Furthermore, this signal appeared in a wholesale market pricing zone so it came at the right time for the position that we were set on taking. After this Doji candlestick, we have two more red and magenta arrow bullish signals. When I saw this I was confident that the market was going to turn around. This trade yielded a little over 20 pips - which worked out fine because ultimately with this strategy that is the initial take profit goal so it worked out fine for us.
4Period_RSI_Arrows Indicator For MT4 - Conclusion
The 4Period RSI indicator is a handy indicator to have in your disposal because with the correct use it is able to give us good trading results. The basic operation of this indicator was clearly explained. Upon this explanation to good use cases were provided to show you how to apply this indicator to your personal trading. This indicator works well for catching small reversal which gives you about 20 to 30 pips but as pointed out that is best to just take the 20 pips and move onto the next trading opportunity.