MA Candles Two Colors Indicator for MT4

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Introduction to the MA Candles Two Colors Indicator

Identifying trend directions is probably one of the most basic skills that new traders should develop. This is because trading with the trend allows for higher accuracy.

Moving averages tend to be the most basic yet effective tool that traders can use to identify trend direction, and the MA Candles Two Colors indicator uses the concept of moving averages as a basis for identifying trend direction.

What is the MA Candles Two Colors Indicator?

The MA Candles Two Colors indicator is a trend following technical indicator which indicates momentum direction by changing the color of the candlestick bars. It causes the bars to change color only when the direction of the momentum has changed.

This indicator plots blue bars to indicate a bullish trend or momentum, and red bars to indicate a bearish trend or momentum.

MA Candles Two Colors Indicator for MT4

How the MA Candles Two Colors Indicator Works?

The MA Candles Two Colors indicator uses an underlying moving average line to identify trend direction. It plots blue candles whenever the candles are above the underlying moving average line, and red candles whenever they are below the underlying moving average line. The color of the candles changes only when a candle closes on the opposite side of the moving average line.

How to use the MA Candles Two Color Indicator for MT4

Since the candle colors are based on an underlying moving average line, the options within the indicator’s settings pertain to its underlying moving average line. It allows traders to modify the period and type of moving average line. Traders can also choose the source of the price applied on the moving average line. It also allows traders to shift the moving average line forward or back.

How the MA Candles Two Colors Indicator Works

Since the MA Candles Two Colors indicator is a trend following indicator, it can be used as a trend direction filter.

It can also be effectively used as a momentum reversal entry trigger, especially when it is in confluence with the long-term trend.

Buy Trade Setup

When to Enter?

Identify an uptrend market and wait for price to temporarily pullback causing the bars to temporarily change to red. Open a buy order as soon as the candles revert back to blue. Set the stop loss on the support below the entry candle.

When to Exit?

Close the trade as soon as the candles change to red or as price action shows signs of reversal.

How to use the MA Candles Two Color Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Identify a downtrend market and wait for price to temporarily pullback causing the bars to temporarily change to blue. Open a sell order as soon as the candles revert back to red. Set the stop loss on the resistance above the entry candle.

When to Exit?

Close the trade as soon as the candles change to blue or as price action shows signs of reversal.

How to use the MA Candles Two Color Indicator for MT4 - Sell Trade

Conclusion

The MA Candles Two Colors indicator is a very effective trend following indicator. It can provide excellent signals especially when used in confluence with a long-term trend. However, it tends to be ineffective when used in a choppy or ranging market. As such, it is important to use this indicator only in the context of a trending market condition.

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MA Candles Two Colors Indicator for MT4

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