The trend reversal forex indicator in mt4 consists of two forex moving averages that signal a price trend change. It indicates whether the recent chart timeframe trend is bullish or bearish so that we can trade only in the direction of the primary trend.
This signal forex indicator will open in a separate window on the forex MetaTrader 4 platform.
How to identify trend reversal?
The mt4 trend reversal forex indicator is made up of two moving averages
- Fast moving average
- Slow moving average
The fast-moving average reacts faster to market changes, while the slow-moving average(MA) reacts slower to the market’s reactions.
There is a proper reason behind using these two moving averages because a fast-moving average will give many false signals. In contrast, a slow-moving average will not generate false signals but will take more time.
In this indicator, a fast-moving average generates a price trend reversal signal, and a slow-moving average(SMA) confirms the direction of a trend reversal.
The price trend will be bullish if the fast-moving average is above the slow moving average.
If the fast-moving average is below the slow moving average, the price trend will be bearish.
How to trade using the mt4 trend reversal forex indicator?
Signals are generated based on the crossover of moving averages.
A buy signal is generated when the fast moving average crosses the slow-moving average from the lower side.
A sell signal is generated when the fast-moving average crosses the slow-moving average from the upper side.
The Bottom Line
The trend reversal forex indicator is the best mt4 forex indicator to identify a trend. During the ranging forex market condition, the slope of MAs will decrease and move sideways.
This forex indicator will not work effectively during ranging forex market conditions due to sideways movement of the moving average and price.