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The internet is brimming with trend reversal indicators that help traders determine the future possibilities of a gain or loss in trading. In the MT4 family, several such indicators fall into two categories: impactful and neutral. The Forex Reversal Indicator falls under the impactful or decent category.
Forex reversal indicator review:
What is Forex Reversal Indicator?
Forex Reversal Indicator represents an indicator that detects trend change price levels and plots yellow dots surrounded by red and blue rings on the chart. Red rings around the yellow dots indicate a reversal in the downtrend, while the blue rings define a reversal in the uptrend.
Download the forex reversal indicator below:
The indicator identifies areas where price action has previously reversed, indicating an opportunity for a potential reversal. To fully comprehend how this indicator works, it is essential first to understand the concept of support and resistance.
Support levels refer to regions in the price chart where the market has previously reversed upwards, reflecting a level at which buying pressure often exceeds selling pressure. On the other hand, resistance levels are regions in the price chart where the market has reversed downwards earlier. Again, these reflect areas where selling pressure often exceeds buying pressure. These support and resistance levels are critical for traders as they allow them to identify areas of a potential reversal.
The Forex reversal indicator employs this concept by considering three different time frames. The first timeframe examines the long-term trend, as it is essential to fully know where the market is headed. The second time frame looks at the mid-term trend, while the third time frame examines the short-term trend. By focusing on these three different time frames, traders can identify potential reversal points that align with all three trends, thus increasing the reliability of the potential reversal point.
The Forex reversal indicator uniquely identifies potential reversal points, as it considers three significant time frames. This thinks the market’s direction over the long-term, mid-term, and short-term, making it a reliable indicator that traders can use in their decision-making process. As a result, using this indicator significantly increases the trader’s chances of making profitable trades while minimizing losses.
Using the Forex Reversal indicator has several benefits for traders. First, it indicates when the trend changes, allowing traders to exit their losing trades before it is too late. Second, it will enable traders to identify potential trades without continuously examining charts. Finally, the Forex reversal indicator eliminates the need for emotional trading decisions by providing traders with clear and objective signals.
The combination of the Forex reversal indicator with trend trading indicators
In this instance, we will consider the FXSSI Trix Crossover indicator with a Forex Reversal Indicator. To use it, treat them as split screens and open one trader beside the other on MT4. Your goal is to trade in the direction the trend is moving. If the Forex indicator shows a definite possibility for uptrend reversal, you will utilize Trix Crossover and make all uptrend trades when the movement sustains. Repeat the same process when the reversal indicator determines a downtrend reversal and makes entries in the downtrend trades.
Signal trading of Forex Reversal Indicator
This method is more suitable for risk-takers as it will repaint signals. To get around this drawback, you need to combine the signals from the indicator with readings from other such technical tools. The tools that would be viable in this situation are price action, resistance, support levels, indicators, etc. If you have confirmation from multiple signals, the trade is less risky and more toward profits.
Who should use the Forex Reversal Indicator?
The people already have significant experience, namely expert and intermediate-level traders. These traders are already proficient in amalgamating various tools and strategies for trading signals.
It is also suitable for swing and position traders because they indulge in trading in high timeframes and find the signals from this reversal indicator more reliable. On the other hand, scalpers need to stay away from this indicator.