Consolidation Indicator

Consolidation Indicator

An ideal indicator for trading consolidations. Consolidation Indicator – is a perfect tool to reinforce your trading strategy.

You already know that the forex market spends most of the time ranging. Sideways movement is one of the ways the market consolidates before resuming a trend. Consolidation provides an ideal way for price breakouts.

But trading consolidation is quite tricky. It requires taking calculated steps and pouncing on the market when the time is right.

One of the best indicators for trading consolidations is the Consolidation Indicator for MT4 – free download. The indicator mimics the Ichimoku Kinko Hyo and uses Fibonacci to display channels. It is suitable for traders who often use Ichimoku Kinko Hyo and analyze the market using channels.

You can use the indicator to trade any currency pair regardless of whether you are a beginner or an experienced trader.

How to Use Channel Indicator for Trading
The indicator displays eight lines that form the channels. By default, each line’s co-efficient uses Fibonacci values. However, you can change the value at any time.

The indicator displays channels based on high and low prices, which help identify the beginning of a new trend.

The eight lines create four channels.

⦁ The tightest channel is the silver channel.

⦁ The next channel is the sky channel confined within the sky blue colors.

⦁ The green line indicates the Zen channel.

⦁ The magenta colors indicate the future channel high.

Essentially, the indicator does not provide a buy and sell signal. Traders get the signal by interpreting the lines just like the Ichimoku Kinko Hyo. You can use the narrow channel to identify the market trend. The wide channel works as ideal support and resistance levels for price breakouts.

The chart shows price movement for the Great Britain pound against the US dollar. Notice how the price is trading within the green Zen Channel. You should therefore wait for the price to touch the Zen channel high or low. When the price touches the channel high, it is an ideal time to sell. Similarly, the Zen channel low provides an ideal level to buy and enter a long position.

Conclusion
The Consolidation Indicator is an ideal tool for trading consolidations. Essentially, the market range 70% of the time. Essentially, you can trade within the range by using the channel lines as the support and resistance zones or wait for the price top breakout. The indicator might seem complicated but gets easy with time.