Arrow indicators of trend reversal forex mt4. Trend reversal indicators for binary options, proven algorithms. An example of the practical application of the Sidus indicator in the Forex trading strategy FMFX Trading System

A trend reversal indicator is an indicator that displays possible changes in asset prices, as well as periods of change (the so-called reversal) of the current trend. Sometimes it is very difficult to determine how the direction of the trend has changed, since the indicators do not have a clear display on the chart. This means that each player in the market can evaluate the readings subjectively, that is, in their own way. It is because of this that it is recommended to use additional analysis tools along with reversal indicators. Such tools can be trend continuation and trend reversal patterns. This will make it possible to check how correct the forecast was.

By using an accurate trend reversal indicator without redrawing, you can eliminate the possibility of false signals and also improve the trading process itself, which in turn will bring more profit.

This software operates based on the use of algorithms for indicators such as MACD, RSI, Moving Average and others.

Download trend reversal indicator

Accurate trend reversal indicator without redrawing

If there is a downward trend in the market, then in this situation a purchase is made, at the same time the indicator signals that a reversal is possible. If an upward movement is visible on the price chart, then you can open an order.

If we see the opposite conditions, when the price increases, and the Accurate Trend Reversal Indicator without Redrawing indicates the possibility of changing the direction of the trend, then when the price moves down, you should immediately open a sell order.

Thanks to this indicator, you can leave the market with optimal profit, since signals are given to close the position. But apply this type signals are possible only when trading follows the trend exclusively. The magnitude of rollbacks and time are taken into account.

It is best to use indicators that determine trend reversals at time intervals lasting more than 15 minutes, since there is no point in trading with these tools at short intervals. In this case, the trend reversal indicator, without redrawing or lagging, will only perform an informational function that serves to monitor the state of the timeframe.

After you download the archive with the program, you will see instructions with detailed settings. If there are no instructions in the archive, you can find them in the article on the website. Installing the indicator is very simple. You just need to copy it, as well as its additions, to the trader’s folder. Now restart the terminal and install the tool on the chart of the selected currency pair.

Every trader would like to have a good trend reversal indicator in his arsenal without redrawing, because what could be better than entering a trade at the very beginning of a new trend and getting maximum profit. However, in practice, the search for such a “Grail” does not yield much results, and most traders return to old proven tools - oscillators.

TOP 3 Forex brokers in the world:

Therefore, since trends exist, the following patterns of their development and movement are fully applicable to them:

1. In its development, a trend always has three phases, such as: beginning, maturity and death, that is, the end of the trend.
2. Its condition must be assessed in terms of the duration of its existence and the amplitude of price fluctuations in it.

Based on these provisions, a technical analysis of the current trend for a particular currency asset in the Forex market should be carried out. The best “turn indicator” of a trend is market divergence, and the most promising tools for indicating all these phenomena are oscillators, indicators for assessing trend strength, and channel indicators.

Trend reversal indicators

Market divergence is known to serve as an early signal indicating an expected change in the current market trend in the near future. Reaching the next market extreme means the current trend is exhausted and there is no opportunity to continue moving in the same direction.

This phenomenon can be most clearly demonstrated by classical oscillators, among which we can name the well-known OSMA, MACD, stochastic oscillator, CCI, RSI, DeMark oscillator and others.

MACD

For practicing traders, the most significant is the classic definition of divergence from technical analysis textbooks, which means the discrepancy between the readings of a technical turn indicator and the direction of the current trend.

Therefore, if the chart of an asset that is growing in price shows a new maximum with a very high value, and on the oscillator following the price not only does not a higher maximum price value appear, but, on the contrary, a lower maximum value appears, then such divergence is called “bearish.” "

Its appearance on the chart is a clear indication of a significant weakening of the market and a high probability of a corrective rollback, or a market reversal. If, on the chart of an asset that is falling in price, a new minimum appears with a very low value, and on the oscillator following the price not only does not a lower minimum appear, but, on the contrary, a higher minimum value appears, then such a divergence is called “bullish”. Its appearance on the chart is also a clear indication of the high probability of a corrective rollback, or a market reversal.

The oscillator exits downward from the overbought zone with the intersection of level 20 and a downward reversal of the previous sideways movement on the weekly EUR USD chart.

The movement of the margin market, even within a trend, is nonlinear and subject to fluctuations. Most trend reversal indicators strictly reproduce these fluctuations without redrawing, moving after the price up or down and repeating new maximum or minimum levels.

Stochastic Oscillator

The exit of the stochastic oscillator upward from the oversold zone with the intersection of the level of 80 and an upward reversal of the previous bearish one on the weekly chart of EUR USD.

Another sign of a reversal is the overbought and oversold conditions, when there are shifts in the balance of supply and demand. An asset cannot be in demand or lose it indefinitely. If it is overbought, then it no longer has the same demand that existed at the beginning of the uptrend.

If a commodity asset is oversold, then a further decrease in demand for it loses its meaning. A shift in the balance of supply and demand is one of the main motivations for changing the trend.

To identify these patterns, it is quite advisable to use a stochastic oscillator, which is capable of marking overbought conditions when its curves are located below the level of 20 and oversold above the level of 80.

A signal to buy is the intersection of the %D Stochastic signal curve from bottom to top at level 20, that is, its curves exiting the oversold zone, and to sell – from top to bottom at level 80, that is, its curves exiting the overbought zone.

ADX trend strength indicator

Exhaustion of the bearish trend and bullish reversal according to ADX indicator signals on the weekly chart currency pair EUR USD.

Speaking about a trend reversal or its correction, it is quite advisable to use an indicator that can assess the strength of the trend and indicate the state of its exhaustion, which will be an indicator of the upcoming trend reversal. A good tool serves for this purpose ADX indicator, which is an index of directional movement.

The indicator generates two lines demonstrating the potential of bulls and bears. The +DI ADX line is called a positive directional indicator, and the –DI line is called a negative directional indicator. A trend is considered bullish if the +DI curve is located above the –DI line. If –DI lies above +DI, then the market is bearish. The ADX line serves to summarize the readings of the first two curves. It is called the line of average directional movement. The purpose of this line is to state the presence or absence of a market trend. The presence of the latter is indicated by an increase in the ADX line. If this line declines or moves horizontally, then there is a flat.

The origin and further development of a trend is marked by an expanded divergence between the DI curves and the upward trend of ADX, which is a signal of a trend reversal.

123Patternsv6

So far we have talked about the tools already included in the set of indicators trading platform MT4. However, on the Internet you can find many indicators for determining the moment of trend reversal, which can be downloaded and installed using the usual algorithm in the folder with indicators, and then on the price chart. One such level indicator is a tool called “123Patternsv6”. This indicator does not redraw and gives clear signals.

The indicator is designed to display a universal graphical model technical analysis— price pattern 123. This pattern should determine the moment of entry into the market both during the existing trend and at the moments of its reversal, which it should identify at the earliest stage.

To enter a position at a trend reversal, you should see in the indicator field the point of the price extreme, which appeared after some price movement along the current trend. If, for example, a minimum is formed, this means that at this level the volume of sales was exceeded by the volume of purchases. Then the price went some more way and a reversal occurred, since the potential of the bears turned out to be weaker than the potential of the bulls and for this reason a price maximum arose.

The price headed down again, but before reaching the last price low, it turned around again. This is an indication that the total volume of long positions has completely exceeded the total volume of short positions and indicates the complete depletion of technical capabilities of sellers. As a result, this leads the trader to the conclusion about the maximum probability of the beginning of a bullish trend.

Indicator 123Patternsv6 on the chart of the GBP USD currency pair.

The second type of signals from the 123Patternsv6 indicator is the possibility of opening a position following a trend movement after a corrective rollback. When, for example, the price movement occurs under conditions of a bullish trend, then at some point the strength of the price movement begins to weaken due to a decrease in the purchasing potential of the bulls, a stop in the price movement occurs and a corrective pullback occurs, the result of which is the appearance of a price maximum. Further, there is a possibility of either some delay in the price at this level, or a further continuation of the upward trend with a breakdown of the last price maximum. This is an indicator of an increase in the volume of open long positions and a very likely continuation of the bullish trend.

The meaning of the trend indicator for trading

There is no single Forex indicator, the best and most accurate tool that allows you to immediately and accurately determine the reversal point of a current trend, and it is unlikely that it will ever be created. The desire of traders to find such a point, however, will always exist, since opening a position at this point is the most promising in terms of taking profit over the entire price range.

Therefore, such a “trend change indicator” can only be a set of several of the tools described above, capable of generating a combined signal about a trend change. Such a collectively complex tool, moreover, will be free from such a drawback as redrawing, which is inherent in most of the trend indicators if we consider them separately.

Most of the tools described above, with the exception of OSMA, are already included in the indicators of the corresponding profile of the MT4 trading platform; there is no need to download them for free or for a fee.

As you know, the most profitable strategies involve trading in the direction of the trend, but in order to determine the market mood with a high degree of reliability on a clean chart, you will need good knowledge of the trading instrument. Therefore, it has become widespread reversal indicators, allowing using mathematical calculations to determine the moment of completion of the previous trend. Several similar algorithms will be discussed in today's article.

Let's start, perhaps, with standard reversal indicators, since often even experienced traders do not know all the possible ways to use long-familiar formulas. And the first of them is the good old RSI (full description of the RSI indicator).

In almost every textbook and training manual, the relative strength index is considered as an indicator of a trend reversal, and the signal is when the indicator line reaches the overbought or oversold boundary. The figure below shows an example of such a recommendation:

I would like to believe that all the problems that arise when using reversal indicators on Forex are only a consequence of market volatility, but similar examples suggest that theoretic teachers, retelling the same thing from year to year, do not look at the graph. Look at the illustration above, where the RSI on the daily timeframe, as recommended by the classics, produced two completely inadequate signals.

One could argue that it is designed to search for corrections, and another trend indicator is needed for confirmation. If so, then you can hang 10 more indicators just to be sure. In fact, the error here is of a “fundamental” nature (not to be confused with the type of analysis). In practice, RSI produces high-quality signals only from the midline, i.e. upon reaching the equilibrium point of 50%.

If we take this circumstance into account, then to create a full-fledged trading strategy Only one indicator will be enough, and a standard one, which is available in any terminal. Below, in the same section of the graph, is a diagram of work under the new rules:

Thus, a trend reversal is considered to be when the relative strength index, calculated over 120 days, reaches 50% of the value. And the entry points themselves are determined using a more dynamic index, and what is important is not touching the 50% line, but rather returning back to the bullish power zone (for the mentioned example).

Readers have probably already noticed that reversal indicators work well on large time frames, but there are also good algorithms for intraday traders, for example, Heiken Ashi. This reversal indicator was not mentioned by chance, since in translation from Japanese its name means “middle stripe”, i.e. again echoes a certain point of balance.

Unlike RSI, the procedure for its application is even simpler, since the original formula gives unambiguous signals and excludes alternative interpretations. Note that in intraday systems, Heiken Ashi showed the highest efficiency on the hourly chart, since with such a filter the influence of random fluctuations is excluded.

As you can see, this reversal indicator calculates new bars using all the prices of the current and previous bars, due to which it allows you to smooth out fluctuations better than any moving average. In addition, in the specialized literature there is a description of candlestick patterns specifically for Heiken Ashi, which are interpreted similarly to standard candlestick patterns.

As Let's give an example The next rule is that a long red candle without a body is a strong sell signal, so if you study this material, you may not need auxiliary reversal indicators to look for confirmation.

Now I would like to remember about another trend reversal indicator on Forex called “Neuro Trend”. Its formula cannot be described in two lines, and this is not really required, because, to put it briefly, to calculate the lines, price extremes for the specified period are taken into account. The figure below shows an example of calculating this indicator for 120 minutes:

For the sake of objectivity, we note that the blue and red “circles” can be ignored, they are useless and were intended as signals to buy and sell. In practice, if you enter into transactions at the moment the lines cross, there is a risk of buying at the top and selling at the bottom. But in all other respects, this indicator is much more effective than the above-mentioned ones, since it identifies trend reversals with almost no delay.

It is obvious that the reader already has suspicions about the subject of “redrawing” of historical meanings. This time we can be happy, because the line, once marked, will not change in the future. The only caveat is that a slight redrawing on the last candle is possible, since closing prices are used for calculations, not opening prices, but almost all indicators suffer from this problem. It is for this reason that it is wise to use Neuro Trend for minutes to minimize errors.

Of course, each of the listed algorithms is useful in its own way, since it is used on its “own” timeframe, but, as already mentioned, in our opinion, the last one is the most effective. The reader may not agree, so in the figure above we compared all three indicators in similar circumstances, but everyone will, of course, make their own choice.

Trend is one of the fundamental concepts of the market, since at any given time there is some kind of trend in the market. Moreover, the type of trend may depend on the period in which it is determined. And it is the direction of the trend that is taken into account in almost every trading strategy. And since the trend can take one of two values ​​(upward or downward), there are transition states between these values, called reversals. To identify such transition states, we use trend reversal indicators without redrawing– technical analysis tools that generate signals when the trend changes.

The absence of redrawing indicates the exclusion of changes to already generated indicator signals when new price data appears. Thanks to this, a trader can objectively assess the effectiveness of the trend reversal indicator when testing it as in real market conditions, and on historical data.

Forex trading professionals have developed many versions of trend indicators, which are both independent algorithms and systems of several other indicators. Some of them will be described below.

Moving averages

This is the easiest to use technical analysis tool, indicating the trend and its reversal (Fig. 1):

• the trend coincides with the direction of movement of the moving average vertically;
• a reversal signal is the intersection of the price and the indicator line.

Its disadvantage lies in the delay of the generated signals, which consists in their occurrence some time after the occurrence of an event in the market.

Moving averages have one parameter – the calculation period. The more absolute value this parameter, the more accurate the moving average signals are and the greater the delay they have. If the period is too long, reversal signals may be formed by the end of the movement caused by it. A period that is too small results in the generation of many signals, most of which are false.

It is best to combine moving averages with different periods or with other indicators.

Q2MA (download )

This technical analysis tool uses a pair of moving averages, shifted relative to each other in time (in the horizontal direction). Signals to enter into transactions are the intersections of these moving averages. These intersections indicate a trend reversal and are marked on the price chart with dots (Fig. 2):

• a green dot indicates a change from a downtrend to an uptrend and recommends buying an asset;
• a red dot indicates a change from an uptrend to a downtrend and recommends selling the asset.

As can be seen from Fig. 2, the Q2MA indicator generates a lot of false signals, especially in the flat. Therefore, you should trade on it only when there is a pronounced trend, opening positions that coincide with its direction (if the price rises, buy, if the price falls, sell).

BBandStop (download )

This technical tool draws a dotted line on the analyzed chart that has a certain color and is located above or below the price (Fig. 3). The interpretation of its signals is as follows:

• the red line located above the price indicates a downward trend;
• the blue line located below the price indicates an upward trend.

Moments of changes in the color of the line and its position relative to the price are trend reversal currents.

Flat_Trend (download )

This is a type of indicator, the signals of which are presented in the form of a histogram located in an additional window drawn below the price chart window (Fig. 4). Flat_Trend signals are expressed in the color of the histogram bars, which are interpreted as follows:

• red bars – the price is likely to fall;
• blue bars – price growth is likely;
• yellow columns – uncertain market state.

Signals of a trend reversal are transitions in the color of the histogram columns from red to blue (buy signal) or vice versa (sell signal). Transitions involving yellow are not taken into account.

Laguerre (download )

The algorithm of this indicator draws a line in an additional window located under the window of the price chart to which it is applied. This line moves in the range from 0 to 1. The key levels are 0.25, 0.5 and 0.75 – their intersections with the indicator line are its signals:

• the line crossing the level of 0.75 from top to bottom indicates the likelihood of a downward trend developing (it is advisable to sell the asset);
• the line crossing the level of 0.25 from bottom to top indicates the likelihood of an uptrend developing (purchase of an asset is advisable);
• the location of the line above the 0.5 level indicates a likely price increase;
• the location of the line below the 0.5 level indicates a likely price fall.

The advantage of the Laguerre indicator is a small delay between the occurrence of a reversal condition in the market and its indication on the chart.

Trading using trend reversal indicators in the Forex market

The basic principle of concluding transactions based on signals from technical instruments indicating a reversal of the current trend is:

• determining the current trend;
• finding trend reversal indicator signals;
• analysis of the market situation using auxiliary tools (to eliminate the possibility of concluding unprofitable transactions based on false signals);
• determining optimal market entry levels, setting Stop-Loss and Take-Profit.

For various indicators of forex market turning points, there are individual ways to implement the described principles. Moreover, each such indicator can be used to build any trading strategies.

Trend reversal indicators are technical analysis tools that help to timely determine the completion of a directional one-sided movement. It works like this:

• a clearly defined trend is established in the market;
• the trader watches the reversal indicators and waits for a signal warning of an imminent change in the situation;
• the received information is analyzed;
• promising entry points are selected;
• the user opens a deal, trades in a new direction and waits for a return signal.

The value of reversal indicators is that almost all of them show signals without redrawing. Due to this, such instruments can be used both in Forex and in the market.

• BBandsStop;
• Flat_Trend;
• Robby DSS;
• Alex_Activity;

You will look at their descriptions, study the signals and look at the trading systems in which they are involved. All indicators are suitable for MT4, so immediately after familiarization you can download them for free. At the end of the article, you will learn how to determine a trend reversal without indicators.

BBandsStop is a simple point indicator that changes its color and location when the market trend changes.

Flat_Trend

Flat_Trend is a simple multi-colored indicator presented in the form of a histogram. IN binary strategies it is convenient to use as a filter that absorbs noise on small time frames.

To load the indicator, click on .


To see Flat_Trend in action, read the article: "". It describes how this indicator is used.

Robby DSS

Robby DSS is not the best, but one of the most convenient reversal indicators. Necessary information the trader receives after assessing two indicators: the angle of inclination and the color of the auxiliary points.

Alex_Activity

Alex_Activity is not a leading indicator, but quite a mobile one, which was created to monitor the current market situation. It is convenient to work with it at short intervals and confirm the selected entry point.

TTL

TTL is a red-green histogram, which is displayed in a separate window under the graph. Using this tool, a trader can assess the stability of a trend and identify turning points that precede an imminent reversal.

Candlestick analysis

Based on this chart, the Price Action method was created, which, based on the composition and number of candlestick combinations, allows you to determine a market reversal in advance.

For detailed information, see the article "". It lists working models that can help improve the quality of your forecasts. To make things easier, we will recommend five formations that you can start learning with.

Graphic models

This forecasting method is based on a visual assessment of the structures that the price has formed on the chart. You can see a detailed description of the method in the article “”. It will examine four popular figures.

• "Head and shoulders".
• "Double and Triple Tops."
• "Wedges."
• "Umbrellas and saucers."

Warning

Conclusion

• Reversal indicators are technical analysis tools that allow you to see a market reversal in advance.
• Reversal indicators are suitable for the forex and binary options markets.
• Candlestick models and graphic patterns are alternative tools that help you see a market reversal in a timely manner without indicators.