The Wilders DMI Averages MT5 Indicator is a powerful tool designed to help traders determine the direction of a trend. This indicator is perfect for detecting volatility and price strength in both bull and bear markets. It falls under the categories of Trend, Signal, and Oscillator indicators.
Understanding the Wilders DMI Averages Indicator
The Wilders DMI Averages Indicator consists of two lines, a green line, and a yellow line, as well as histograms in the window below the price pattern. The green line or plus direction indicator (+DI) shows price momentum is rising, while the minus direction indicator (-DI) shows momentum is falling. The behavior of these lines and the histogram can guide you on whether to open a buy or sell signal.
How to Trade with Wilders DMI Averages Indicator
Buy Signal
A strong buy signal occurs when the histograms are above level 20, and the green line is above the yellow line. Also, the histogram fills with lime histograms when the price is in an uptrend. This indicates a strong trend and a good time to go long.
Sell Signal
On the other hand, a strong sell signal occurs when the histograms are above level 20 and the yellow line is above the green one. The histogram is colored pink when the market is in a downtrend. This is a clear sign to open a short position.
Real Market Example
The above chart shows the price movement of the EURUSD on an hourly chart. The green line is above the yellow line, indicating that the currency pair is in an uptrend. The histogram above level 20 and the lime color indicate a strong uptrend1. These are all clear signs of an ideal buying position.
Conclusion
Wilders DMI Averages are a great tool for determining the direction and strength of a price trend. It’s ideal for both long-term and short-term trades, novice and experienced traders. You can also use the oscillator on any time frame. Remember, you should close the position when the two lines cross because this is a clear sign of a change in market trend.
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