Daily Channel Indicator For MT4
Table Of Contents:
- Daily Channel Indicator For MT4
- Trading ideas with the Daily Channel Indicator For MT4
- Daily Channel Indicator For MT4 - Trade Entries
- Daily Channel Indicator For MT4 - Reversal Entries
- Daily Channel Indicator For MT4 - Conclusion
The Daily Channel Indicator For MT4 displays any time zone daily. This tool marks the High price and the Low price reached during that particular time zone. The indicator creator recommends its use on hourly charts and lower.
Trading ideas with the Daily Channel Indicator For MT4
Channel based indicators are useful in that they reveal the highs and lows in the market in the form of a tunnel. This channel indicator that we are using here today is one that is constantly monitoring the highs and lows within a trading day, and therefore, it produces the squarish like channel indication that is always changing relative to its computation.
The extreme high of the channel represents the resistance line which is colored in blue and then the extreme low of the channel is the support line which is colored in red. In the middle of these lines you find a green line which just shows you the equilibrium point of the day. In the image below are presented to you one way of using this indicator.
Referring to the image above, you can see how I used this channel indicator to draw trend lines. This is great because it allows me to analyze the market effectively and recognize moments when the market is about to make proper reversals or breakouts. In order for you to draw the uptrend line you just need to connect two turning points of the red line and extend it into the future and that will be your trend line for the uptrend.
Similarly with the downtrend, you will use the blue lines of the channel index indicator to have two touching points to generate a resistance trend line which is also extended into the future. Every time the market breaks these levels, you know that the market is about to make a reversal.
Daily Channel Indicator For MT4 - Trade Entries
I have also listed below two more trading opportunities which you can explore - in fact there are three. The first trading opportunity as seen below is a trend continuation pattern.
Referring to the image above, we can see what a trend continuation trade looks like. A trend continuation trade is a trade which does not have a super high risk-to-reward ratio compared to a reversal trade because with a reversal trade you are attempting to enter the market at the earliest point when a new trend is formed.
With trend continuation pattern you are looking for movements in the market where the trend is going to be prolonged after a slight retracement or small consolidation phase has taken place. In the image above we identified a bullish trend continuation trade. I used the Channel indicator to find this entry point for a buy - basically you just use the middle line of the channel indicator as a guideline.
If the price breaks above and closes above this green line, then you know that the market is most likely to continue in the direction of the break. What was beneficial about this situation, was that there was a strong bullish pattern) that came about and this came in the form of a bullish engulfing pattern.
Which was an excellent opportunity to trade. With the trend continuation setup, you can apply the same logic for sell trade setups. Furthermore, you can also use the extreme lows and extreme highs of the channel as take profit targets. Though the market may not always reach these targets but it is still a reliable guideline to use for such purposes.
Daily Channel Indicator For MT4 - Reversal Entries
Next up we have two other trading opportunities which came in the form of reversal signals as shown below.
With reference to the image above, we have identified a bullish reversal entry on the left-hand side and on the right hand side we identified a bearish reversal entry. How you go about identifying these entry points is by adding a Bollinger bands indicator alongside the daily channel indicator.
All you then need to do is, when looking for a bullish reversal you need to wait for the market to be in a downtrend and then you need to wait for the red line iof daily channel indicator to cross the middle line of the Bollinger Bands indicator. The moment it ntersects the middle line of the Bollinger Bands indicator is the time you should actually open your trade as shown in the image.
The next one on the right-hand side was almost the same, except that it was a sell reversal trade set up. With the sell reversal situation, you want the blue line of the daily channel indicator to meet or intersect the middle band of the Bollinger Bands indicator. The moment that happens,you must open your sell trade.
Daily Channel Indicator For MT4 - Conclusion
In conclusion, the daily channel indicator is a top class indicator to use for multiple purposes. This was proven effectively well enough. We used this indicator for constructing relevant uptrend and downtrend lines. Secondly, we used it for trend continuation trading. Then lastly, we used it for trading reversal trade setups. This just shows how versatile or flexible this trading tool is.