Fibo Moving Average Indicator For MT4
Table Of Contents:
- Fibo Moving Average Indicator For MT4
- Trading ideas with the Fibo Moving Average Indicator For MT4
- Fibo Moving Average Indicator For MT4 - Market Sentiment Detection
- Fibo Moving Average Indicator For MT4 - Catching Bullish And Reversal Trading Opportunities
- Fibo Moving Average Indicator For MT4 - Conclusion
The Fibo Moving Average Indicator For MT4 plots a Fibonacci sequence based Moving Average. Price closing above the curve is deemed bullish, while values below signify bearish price action.
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Alerts In Real-Time When Divergences Occur
Trading ideas with the Fibo Moving Average Indicator For MT4
Fibonacci ratios are an important aspect of both technical and fundamental analysis - more so with technical analysis because the market respects Fibonacci sequences and ratios quite strongly. It is this respect given to ratios that enables us to formulate trade ideas based on support and resistance.
However, it is also good to have Fibonacci ratios used to give us more capabilities like discovering when the market is likely to reverse. This indicator combines moving averages with Fibonacci ratos to give us oscillations in the price-action screen to know what the market sentiment is and when that sentiment is about to change in the form of crossovers.
This is definitely amongst one of the best technical trading tools in the trading industry for us to use. It is here to edify your trading abilities and experience to a greater level so that you become much more comfortable and confident in how you are able to evaluate the market conditions.
Fibo Moving Average Indicator For MT4 - Market Sentiment Detection
We will use this Fibonacci moving average indicator to help us determine the general market consensus. Determining the general market trend consensus gives us a strong advantage in our analysis and it helps us to establish great trading ideas which we attempt to formulate in conjunction with the direction determined by the indicator. In the image below you can see I have made reference to a few structures in the market which can easily be determined in terms of which way the market is going using the indicator.
So on the left-hand side and towards the middle side you can see that we have the blue line below the yellow line. Whenever you see that the blue line of the indicator and as well as the price action is below the yellow line you should automatically know that the market is bearish. Furthermore, you can also use this to determine the bullish consensus in the market using this indicator.
So when the blue line of the indicator, as well as the price action, is above the yellow line then it means that the market is bullish as I pointed out to you in the picture above.
Fibo Moving Average Indicator For MT4 - Catching Bullish And Reversal Trading Opportunities
This indicator actually helps us or aids us to also catch bullish and bearish reversals as shown in the image below.
So if you are looking to catch a bullish trade, then you must look for those moments when the blue line and the price action crosses the yellow line to the upside because that signifies a bullish reversal, therefore, it is good for us to open up a buy order as soon as that happens. The image above shows us two different bullish reversals which follows this crossover philosophy. Up next we have two examples of how to catch bearish reversals.
Before I go on further, I just want to mention that this trading method or strategy actually works on those higher time frames from one hour and up. So if you are looking at catching bearish reversals then all you need to do is wait for the blue line and the price action to cross the yellow line to the downside which signifies to us are bearish reversal therefore we need to open up sell orders in the direction of the crossover.
That is all there is to do this reversal trading opportunity, however, you might want to take it a step further in case you want to be more accurate and conservative in your trading. There are different ways in which you can do this. One way requires that you must also incorporate different reversal candlestick patterns and you must also incorporate some other reversal structures.
In the image below we see that there is actually a bearish divergence pattern that has formed in the market - and it was an extended bearish divergence structure. The oscillator was making lower lows and price action was making higher highs as shown in the image below.
The divergence referenced in the image above shows us that the bearish reversal was imminent. However, at this point, we still do not have enough concrete evidence to trigger us into opening sell orders. Therefore the next step is maybe to wait for the blue line to cross over the yellow line to the downside.
This is what transpired. It did indeed happen and while this was happening there was also a bearish engulfing pattern that formed within the same period with which was a strong motivation for us to actually open up sell orders. Just remember that in this case your stop loss should be positioned above the last swing high before the cross over to the downside took place.
Fibo Moving Average Indicator For MT4 - Conclusion
In most cases reversals are the trading moves which gives us the best profitability especially when we are able to catch them in the early parts of the changeovers. This indicator enables us to do so because it provides us with reversal confirmations when the blue line crosses over the yellow line.
You should use this strategy mainly on a higher time frame like the hourly-chart or the higher time frames so that your trading signals are reliable. In most cases, as mentioned in the article, it is best to incorporate other elements into your trading to validate the crossover signals which are generated by the fibo moving average indicator.
Luckily for us, we discovered a sell trading opportunity that came at the back of a bearish regular divergence structure. This was not the only motivating factor for us to open our sell trade because upon the crossover which took place the price action printed a bearish engulfing pattern - and that was our final triggering condition for us to maximize the bearish changeover trading movement.
