Trend Reversal Indicator is a simple yet rather effective Forex trading tool that does exactly what its name suggests. The indicator recognizes price direction and, most importantly, when a trend makes a reverse. Taking advantage of trade reversals is potentially very profitable, so having such tools at your disposal can be very handy.
Trend Reversal Indicator Description
The indicator consists of two lines: blue and red. These lines are two moving averages displayed in a separate window placed just below the main trading chart.
After the installation, your trading chart will look like this:
The Blue line represent the fast-moving average while the Red one indicates the slow-moving average. The fast-moving average reacts faster to market changes, while the slow-moving average reacts slower but filters out false movements.
The Trend Reversal Indicator has two functions:
1) It indicates the current trend:
The price trend is bullish if the fast-moving average is above the slow moving average.
If the fast-moving average is below the slow moving average, the price trend is bearish.
2) The indicator signals a price trend change.
Basic Trading Signals of the Trend Reversal Indicator
BUY signal: A buy signal is generated when the fast moving average crosses the slow-moving average from the lower side.
SELL signal: A sell signal is generated when the fast-moving average crosses the slow-moving average from the upper side.
Examples of the trades:
My conclusion on the Trend Reversal Indicator
I’m sure the Trend Reversal indicator is well worth adding to your trading collection. This is a good tool for identifying trend direction and trend reversals, so it will probably enhance your chances of success. But please note that it’s better to use this indicator as a part of a trading strategy rather than as a stand-alone tool.