The forex market does not always move in a bullish or bearish direction in forex. Sometimes, it makes ranges and then gives the chart breakout after the range. A forex trader can benefit a lot if they can detect the chart breakout. Buying or selling at the beginning of a breakout also ensures high risk-to-reward ratios. But the question is, how can we know a chart breakout will happen? For this purpose, we can use the forex consolidation indicator for mt4. This forex indicator uses Ichimoku Kinko Hyo and Fibonacci ratios to draw four channels on the forex trading charts. We can use these chart channels to understand if the market will breakout or continue to move in a range.
Working of forex consolidation indicator for mt4:
When you apply the forex indicator to your MT4 charts, the forex indicator will draw four channels. These four chart channels exhibit four different types of information about the market.
- Channel 1: The narrow channel in the center of the remaining chart’s three channels is silver. That is why it is called Silver Channel.
- Channel 2: The channel out silver color channel is colored sky bluish. It is also called the Sky channel.
- Channel 3: This is significant and gives us valuable data for our forex trading strategies. You will notice that the price keeps fluctuating between the third channel most of the time. We call this channel Zen Channel.
- Channel 4: Fourth indicator channel is also significant and can act as a support or resistance for the price. And it is called Future Channel.
Settings on forex consolidation indicator mt4:
In the settings of this forex indicator, we can find the following parameters.
Shift – You can change how much offset you want
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TSP shows the future line’s prediction when the chart price shifts from left to right.
SSP – Here, you can change the calculation period for your forex indicator.
SilvCh – This corresponds to the position of the silver channel. The value is set to 38.8 Fibonacci
SkyCh – This corresponds to the position of the sky channel. The value is set to 23.6 Fibonacci
ZenCh – This corresponds to the position of the Zen channel. The value is set to 0 Fibonacci.
FutCh – This corresponds to the position of the Future channel. The value is set to 61.8 Fibonacci.
Trading Strategy for forex Consolidation indicator mt4:
The indicator itself does not provide us with buy or sell signals. But from the mt4 charts, we can see that the chart price mainly fluctuates between Zen Channel.
Buying Strategy:
We can place a Buy order when the price touches the channel low.
Selling Strategy:
We can place the sell entry order when the price touches the channel high.
Conclusion:
The market moves in range over 70% of the time, and you can use the forex consolidation channel indicator to enter trade inside the periods when the market is ranging. Because of its straightforward strategy, you can use this forex indicator even if you are not very experienced.
