Trend Channel Indicator

Trend Channel Indicator

Determines solid support/resistance levels & supports MTF charts

The Trend Channel is an essential indicator for technical traders, especially those who intend to place orders within correct trend directions.

A trend channel offers various trading options like pullback entries, breakouts, and range/swing trading. Moreover, it provides other technical support, such as determining the stop-loss levels and trailing stops of active orders.

Both trendline and trend channels are accepted as universal technical tools for price-level analysis. So, you can apply it for trading any financial instrument, including forex, stock, cryptos, commodities, and other assets available in MetaTrader. Furthermore, this indicator suits MTF trading, which means you can apply it on any timeframe of MT4 platforms.

How to do Forex and stock trend analysis in MT4 by using the Trend Channel indicator?

This indicator plots two different trend channels at a time. The upper channel comprises two trendlines based on higher-highs and lower-highs of the market. On the other hand, the lower channel’s trendlines represent higher-lows and lower-lows of past price waves.

The price moving inside the higher channel means the market is likely to test its previous swing high as a resistance. In this case, we need to closely watch how the market reacts to the channel’s resistance.

For instance, the price rejecting to move above the trendline resistance and rebounding downwards offer a sell-entry opportunity. Otherwise, a price break above the resistance may turn into a breakout buy event.

During a strong downtrend market, the price is likely to break the support line of the higher channel. A candlestick manages to close below the trendline support confirms a bearish breakout.

The lower channel refers to the buy zone where the price meets trendline supports and intends to bounce upwards. A bullish candlestick rejecting the trendline support represents a classic buy signal.

While anticipating trend-following trading opportunities, ensure the channel’s path matches your trade direction. For instance, during an uptrend condition, all the trendlines of trend channels will be heading upwards. In such a condition, even though the price moves downwards, we’ll remain bullish and look for buy signals until the trendlines change their direction to the south.

Conclusion
Using trend channels is a popular technical method of determining buy/sell levels. It provides a price-action-based projection of future price swing levels and works at any market condition. Every time the price rebounds at the channel’s trendlines, traders get an opportunity to activate orders based on the current trend direction. Forex and stock speculators who use the high-low method for predicting the upcoming trend will find this auto MT4 trend channel indicator extremely useful.