RSIFilter_v1 Indicator For MT4
Table Of Contents:
- RSIFilter_v1 Indicator For MT4
- Trading ideas with the RSIFilter_v1 Indicator For MT4
- RSIFilter_v1 Indicator For MT4 - Detecting Trend Direction
- RSIFilter_v1 Indicator For MT4 - Top-down Scalping Opportunity
- RSIFilter_v1 Indicator For MT4 - Conclusion
The RSIFilter_v1 Indicator For MT4 is a trend following tool that plots Blue and Orange bars to depict the underlying trend in a market. When the indicator plots Blue bars, traders should desist from initiating short trades. Contrarily, when the indicator prints Orange bars, the trend is assumed to be down and traders should avoid long trades.
Trading ideas with the RSIFilter_v1 Indicator For MT4
One of the key aspects of technical trading is that you need to know which direction you should be trading in. Because ultimately when you are making the trend your friend and trading in the direction of the underlying trend you are riding on the momentum of the trend to carry the trade into profit.
The opposite of doing this is called counter-trend trading which is not recommended to you however there are various trading techniques that you can use to great effect when it comes to counter-trend trading. However, for this purpose, we will be trading in line with the trend direction.
RSIFilter_v1 Indicator For MT4 - Detecting Trend Direction
It is important for you to know what is the underlying trend or what is the underlying market bias. There are various ways that you can use to determine the market bias and one of those ways actually entails you using an RSI filter indicator full. The RSI filter indicator helps us to know which way we should trade in as shown in the image below.
In the image above its shows the indicator giving us direction in a bearish market context and therefore we will look at sell signals only. By default, the indicator tells you exactly which way to trade-in. As you can see that when there are orange bars just as the indicator suggests we should open sell trades on the indicators instead of buy trades so that we avoid trading against the underlying trend.
In the next image below we follow the same analytical sequence that we used in the previous example the only difference with this example is that we using it in a bullish market context.
So with reference to the image above you can see that the indicator window is giving us or showing us a bunch of blue bars therefore we will focus on looking for buying opportunities. The blue bars mean that the market is currently in a bullish phase and therefore long trades should take first preference in such cases so that we avoid trading against the underlying trade which is a risky pursuit.
RSIFilter_v1 Indicator For MT4 - Top-down Scalping Opportunity
With the use of knowing what direction to trade in, below we have taken the same philosophy to a greater level so that we can actually identify proper trading opportunities. So in the image below you can see I have the EURUSD pair which is on the 15 minutes chart.
As for the image above we are using the indicator for a top-down scalping technique where we conduct the analysis on the 15-Minute chart to identify entries. However, the 15-Minute chart is not the chart where we will be making our buy entries into the bullish market. The indicator is showing us blue bars at the moment but there is still enough strength in the market to extend the current uptrend however the market could break to the outside and return back but we will open a buy position on a smaller time frame like a 5-minute chart.
The lower time frame allows us to gain access to various bullish trend continuation patterns that we can exploit. In the image below you can see that I have actually switched down to the 5-minute chat.
With reference to the image above as I mentioned earlier that the 5-minute chart is the chart on which I will be making a buy entry into the market using the top-down scalping method. So essentially with the top down scalping method, you are basically relying on the technical analysis of the higher time frames like the 15-minute, 30-minute, or 1-hour chart and then you go down to the lower time frame to identify opportune moments you can exploit based on the technical evidence identified in the higher time frames.
As you can see the 5-minute chart is still showing us blue bars which is good for our buy narrative. Furthermore, if you look at the structure of the price action it is almost as though it is forming an ascending triangle. If that is the case then we are looking pretty good for activating buy orders. If the trend line is to offer a great deal of resistance to the sellers, then that sell rejection is the key for us to open up buy trades when a bullish pattern is formed on the support line or when the market exits and returns back into the uptrend channel.
RSIFilter_v1 Indicator For MT4 - Conclusion
In the context of technical trading, it does not matter what your skill level is, everyone requires the use of proper and reliable technical indicators to give us a good advantage when it comes to analyzing and trading in the financial markets. This indicator works to our advantage well and that has been proven successful in the article.
It has been successfully revealed that this indicator can be used to give us insights as to know which direction to trade in through the use of colored bars. These bars are colored in orange and blue. As it has been shown, the orange bars means that we should take heed to only focusing on making bearish trades because the orange bars means that the market is going through a bearish zone. And then if we see that we have blue bars then we should place our focus on identifying high probability buying opportunities because the underlying market direction is bullish and therefore the bullish momentum will be mostly with us.
Beyond this aspect or use case, there are more ways in which this indicator can be used as shown above. This indicator can be used for determining where the possible trend continuation signals may be found. But as it was shown, it is best to use a top-down approach whereby you draw in trend lines and analyze a higher time frame and then look for solid entries on the lower time frame.