Support and Resistance Indicator For MT4
Content
- 1 MT4 Support and Resistance Indicator
- 2 How does the support and resistance indicator work?
- 3 Best support and resistance strategies
- 4 Which of the 3 strategies should be used?
- 5 Support and resistance settings
- 6 Should I use the support and resistance indicator?
- 7 Configure the support and resistance indicator in MT4
Support and resistance (S&R) is an important concept in a trader's day to day life that helps to reduce risk and find more accurate market entry points.
What is support? It is a level or 'zone', which acts as a kind of obstacle against the price's downward trend.
Resistance, therefore, is the 'zone' level that acts as an obstacle to price growth.
This article will provide a simple and effective method of finding support and resistance levels/zones using a free indicator available for the popular MetaTrader 4 platform.
You will find the download link below.
MT4 Support and Resistance Indicator
The S&R indicator automatically finds the closest support and resistance levels (or zones).
Advantages of Support and Resistance Indicator
- The indicator works on all timeframes (it is advisable to choose at least M15)
- The indicator works on all markets
- do not repaint
- flexible settings
Disadvantages of support and resistance indicator
- There is no guarantee that the levels will work the way you expect.
- The indicator does not issue warnings/alerts
How does the support and resistance indicator work?
The indicator work is based on the fractal indicator built into the MT4 platform. The fractal is a local extreme described by Bill williams.
The support and resistance indicator automatically finds the levels or zones where several newly formed fractals are located.
It is a sign that the level/zone works as support/resistance.
Support and resistance levels
The indicator shows the levels found by color:
- Blue — support levels;
- Orange — resistance levels
The figure shows the number of fractals. The higher the value, the stronger the level. By clicking on the picture, you will see fractals, used to build the level.
Best support and resistance strategies
There are three basic strategies for trading based on support and resistance levels:
- the reversal
- Breakout
- The breakout test
the reversal
This is the most apparent strategy when the trader needs to sell close to resistance levels and buy close to support levels (see examples in the chart below).
The Reversal Strategy Example
The danger of this strategy is that it will cause losses during sudden movements. Therefore, you should probably avoid using it during important news releases (shown by the arrow above).
Breakout
This strategy implies selling the asset as soon as its price breaks the support level and buying the asset as soon as the price breaks the resistance level.
The Breakout Strategy Example
It is rational to apply this strategy at the beginning of active market sessions (European and American), when important news is expected and when the price has been within a narrow range for a long time.
The Breakout Test
This strategy uses the principle of the “mirror” level, that is, after a breakout, resistance acts as support and former support becomes resistance.
The Breakout Test Strategy Example
The chart above shows the downtrend, blue support levels, after the breakout, offered resistance to rising prices, providing opportunities for enter a short position.
Which of the 3 strategies should be used?
There is no definitive answer to this question, as the strategies listed above cannot just be right or wrong.
All of them will give you profitable points and false signals.
Try using each of them in one demo account to see which one suits you best.
Most importantly, cut losses and assess profit growth potential.
Support and resistance settings
Support and Resistance Indicator has simple and flexible settings.
Support and resistance settings
Level Width — from 1 to 10
- 1 — the indicator will show narrow levels
- 20 — wide areas
Frequency — this setting determines how tightly the levels are placed.
- More — more firmly
- Less — the most significant levels are shown.
Sensitivity — how quickly the level can be considered broken.
- High — for the level to be considered correct, a minimum number of fractals must appear after it.
- Low — lower sensitivity of the indicator to the level break.
Display Period — this setting determines the number of candles in the history that are analyzed.
- Short = 300 candlesticks
- Long = 1.200 candlesticks
Touches to show — minimum required number of fractals to build a level.
Show touches count — displaying the number of fractals in the left part of the level (true/false)
Show touches on click — whether to show fractals when clicking on their number (true/false)
Projection length — how far in the future the levels should be shown.
Should I use the support and resistance indicator?
The support and resistance indicator will be useful for everyone, regardless of their experience:
- For starters. The indicator can provide valuable help for those who don't know how to build S&R levels on their own.
- For experienced traders. It saves time, allows you to build strategies,
Support and Resistance Indicator — Download for free
Configure the support and resistance indicator in MT4
The installation of the indicator is usual. Here is a step by step guide for Windows users:
To add custom EAs or custom indicators, open MetaTrader and go to File>Open Data Folder, then select MQL4/5>"Experts" ou "Indicators" and paste your MQL4/EX4 or MQL5/EX5 file in this folder.
When the platform is opened again, you should see your custom EA/Indicator in the Navigator window and you can drag and drop it onto the chart(s) you want.
How to configure the indicator
Related Posts
Sunflower Indicator (Semafor) MT4
Sunflower Indicator (Semafor) for MetaTrader 4 can be used with any Forex trading system…
FX Meta Scalper Rating
[box_text] FX Meta Scalper Review — The new FX META SCALPER indicator is a…
MetaTrader 4 and 5 Trend Direction and Strength Indicator
The trend direction and strength indicator is an indicator that allows you to determine the…
WT Lineas Indicator For MetaTrader 5
WT Lineas Indicator For MT5 allows you to easily draw technical lines and levels on the chart…
Harmonic Pattern Scanner MT4
Harmonic Pattern Scanner Indicator is an MT4 trading indicator that automatically traces patterns…
RVI Custom Levels Alert for MetaTrader 5
RVI Custom Levels Alert trading indicator for MetaTrader 5 is the modification of…