FX5_FiboSpiral Indicator For MT4

FX5_FiboSpiral Indicator For MT4

Table Of Contents:

  1. FX5_FiboSpiral Indicator For MT4
  2. Trading ideas with the FX5_FiboSpiral Indicator For MT4
  3. FX5_FiboSpiral Indicator For MT4 - Settings
  4. FX5_FiboSpiral Indicator For MT4 - Trading Example

The FX5_FiboSpiral Indicator For MT4 plots the Fibonacci golden spiral on a price chart. A golden spiral is nothing but a logarithmic spiral, whose growth factor is determined by the Fibonacci golden ratio of 1.618. Fibonacci spirals can be used to locate market turning points with substantial accuracy.

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Trading ideas with the FX5_FiboSpiral Indicator For MT4


In financial trading, one of the most popular tools to use for technical analysis is a Fibonacci trading tool. All the Fibonacci trading tools are excellent analytical resources for the mere fact that they are able to accurately predict patterns in human behavior.

The Fibonacci ratios and sequences are not exclusively applicable to just human behavior but it also applies to various elements in our natural habitat such as shells and biology.

These Fibonacci ratios also play an important role in trading in itself because it is able to accurately predict certain patterns within the market arena. There are a bunch of Fibonacci trading tools that we can use - one of the popular ones is the horizontal Fibonacci trading tool which is also called the Fibonacci retracement and this is used to check different support and resistance areas through the use of Fibonacci sequences and ratios. But in this case, it is used as a spiral drawing tool.

So the Fibonacci spiral is a technical analysis tool that analyzes the market based on cyclic spirals which expand according to a Fibonacci ratio. This expansion Factor or ratio is 1.618.


FX5_FiboSpiral Indicator For MT4 - Settings


Before we get into the technical bits of how to actually go about applying this spiral indicator to your trading we need to first look at a few settings and attributes that comes with this indicator. In the properties section, you will discover that this indicator has a radius setting, a golden spiral cycle setting, a clockwise spiral setting, and a spiral color setting - for one and two.

The radius setting defines the radius of the initial cycle of the spiral indicator. We also have what is called the clockwise spiral. So when this clockwise element is in a true state then the indicator will generate spirals in a clockwise direction. If it is set to false it will generate spirals in an anti-clockwise direction.

Thirdly we have what is called the golden spiral cycle setting. This setting is basically just a means for you to define the number of cycles you require before the indicator starts applying its golden ratio multiple to draw the next bunch of cycles. The default setting is 1.

Meaning that the spiral indicator generates only one cycle before it expands to the next cycle through the use of a golden ratio. And then lastly we have the spiral color setting which is another adjustable parameter for changing the colors of spirals 1 and 2.



These are quite self-explanatory but as you can see in the picture that one color is blue and the other color is red so based on the background settings you want spiral colors that makes the whole indicator conspicuous.


FX5_FiboSpiral Indicator For MT4 - Trading Example


There are several ways in which you can go about using this indicator, for this purpose I will only touch on one or maybe two ways in which you can go about using the indicator. In fact, I will actually reference real examples so that you can have a better understanding of its functionality and its possible use cases if you wish to integrate this indicator into your own trading.

When using this indicator and these methods you need to apply with the knowledge of the market context in which you are trading. If you know the market context you will have a better understanding of how to interface the spiral indicator with your analysis to identify high probable entries into the market. The spiral indicator tool has two colors - blue and red.

The points where the color changes take place form a horizontal line. Depending on which way the market is trending in - this horizontal color-changeover border can either act as support or as resistance. In our case, based on the picture below, we can see that its line is acting as resistance.



Looking at the image above we are in a bit of a dilemma because the market could go either way. However, by conducting proper analysis we can unlock a probable trade setup. The image above shows that the market reached resistance. It hit this resistance level a number of times thus confirming its relevance in the market.

The market has been struggling to break this level and this hints at a possible reversal to the downside however, it is a lot deeper than that. The price action activity shows a bearish engulfing pattern with a bunch of pin bars with long wicks flip to the upside. This is a strong indication of bullish-rejection thus affirming the motive to go short.

But going short can only be for the short term because as you can see I have pointed out to you a bullish ascending triangle pattern. The market is nestled in an ascending or bullish triangle.This means that the long-term outlook is more bullish than bearish. Therefore, if you are going to go short on the reversal then you must do so for a short time because the market is geared towards making a big rally.

 

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