Introduction to the Demark Trendline Trader Indicator
One type of trading strategy that many traders use is a momentum breakout. These are often traded as price breaks out of a support and resistance levels, which could either be diagonal trendlines or horizontal price levels. The Demark Trendline Trader Indicator automatically plots these trendlines and support or resistance levels which traders can use to trade breakouts from.
What is the Demark Trendline Trader Indicator?
The Demark Trendline Trader Indicator is an indicator which displays support and resistance levels on the price chart. It shows diagonal support and resistance levels or trendlines, as well as horizontal support and resistance levels. It plots the diagonal resistance line as a lime green line and the diagonal support line as a red line.
This indicator plots two sets of horizontal support and resistance levels. One is a tighter support and resistance level closer to the current price, while the other is quite far from the current price. It plots the horizontal resistance lines as green and the horizontal support lines as crimson.
It also displays the price points where price may start to breakout as well as its probable target levels.
How the Demark Trendline Trader Indicator Works?
This indicator uses a complex algorithm which connects swing highs and swing lows to identify the diagonal trendlines. It also uses the concept of supply and demand zones, as well as swing highs and swing lows, as a basis for identifying the horizontal support and resistance levels.
The price points displayed on the upper left corner of the chart shows the price points which are used as the basis for identifying the support and resistance lines as well as the diagonal trendlines.
How to use the Demark Trendline Trader Indicator for MT4
The Demark Trendline Trader Indicator has several settings which can be modified within the indicator’s settings. Most of it should be set to true to display the significant price levels and plot the lines as showed above. Some of the settings are visual modifications such as changing the color of the lines, its thickness, as well as its style.
The last option, which is labeled “Default is false. It seems the Horizontal Line…” should be set to true to display the minor horizontal support and resistance line where price may also breakout.
This indicator can be used to identify potential breakout price levels and its corresponding targets.
The diagonal trendlines, as well as the minor support and resistance lines which are closer to price action, can be used as a basis for trading bullish breakouts or bearish breakdowns. Traders could then target the major support and resistance levels displayed as the thicker horizontal support and resistance lines as the take profit price levels. The data displayed on the upper left corner of the chart also suggests this method of using the indicator.
If you would notice, the diagonal trendlines also form a tightening triangle pattern which also indicates a potential breakout on either direction.
Conclusion
This indicator is a great tool for identifying potential breakout trades coming from a tightening market price range. It is very useful since it indicates the price levels where price may start to breakout from, as well as the target price levels where traders could exit the trade.
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