MACD Flat Market Detector Indicator
Platform: MT4 Type: Momentum Last update: September 26, 2024The MACD Flat Market Detector Indicator for MT4 was created as a response to a trader’s need to know ranging market conditions where price moves up and down within a tight range and without any clear trend direction. What’s more, that forex indicator is available to free download.
Does the above description sound like meeting your needs too? Let’s take a closer look at it and bring some practical trading examples.
Basically, it’s just a MACD indicator but additionally, it has a threshold marker providing information on whether the market is choppy or has strong momentum. It consists of histogram bars and dashed horizontal lines separating the flat market from the firm market.
When the bars remain inside the channel created by these horizontal lines, it’s an indication of a sidelined situation of the price. When the bars break above the higher line, we consider it as a bullish trend momentum confirmation. On the other hand, the bars must break below the lower channel band to confirm a valid bearish trend momentum.
This is an example of a choppy market since bars move within channel boundaries. Pay attention to price bars too as they make short upward and downward moves.
How To Read Colored Histogram Bars?
The color of the histogram bar depends on its value compared to the previous bar. It plots a blue bar whenever the value of the current bar is higher than the previous bar and a red bar whenever the value of the current bar is lower than the value of the preceding bar.
Settings
There are a few variables you can customize to fit your preferences or your trading strategy.
How To Trade With The MACD Flat Market Detector Indicator?
Actually, there are many ways to utilize the MACD Flat Market Detector – from rangebound trading to breakout strategies. Below, we describe a trend continuation strategy during strong momentum conditions and how you can benefit from it in a few simple steps.
Buy Signal
- Histogram bars turn blue
- Indicator’s values exceed flat market level
- Open long trade when the above conditions are met
- Set stop loss a few pips below the most recent market’s low point
- Take profit when histogram bar turns red or close it after achieving a satisfying risk-to-reward ratio
Sell Signal
- Histogram bars turn red
- Indicator’s values exceed flat market level
- Open short trade when the above conditions are met
- Set stop loss a few pips above the most recent market’s high point
- Take profit when histogram bar turns blue or close it after achieving a satisfying risk-to-reward ratio
Conclusion
We find the MACD Flat Market Detector Indicator a really useful forex tool and pretty versatile too. It can be utilized just as a filter, but it can also provide signals. If you want to avoid trading choppy market, it will tell you when to do so. If you want to know when there is strong momentum in the market, it will also give that information. Both beginners and advanced forex traders can take advantage of that gauge. Feel free to combine it with other technical analysis indicators or apply it to your favorite trading strategy.
