The average price movements can provide useful information to predict logical price levels at which price will reach, and those where price is more likely not to reverse. This concept is the basis of ATR Channels Indicator, which plots lines using the Average True Range.
ATR Channels Indiator is a type of technical indicator that is channel-specific and is based on the Average Tru Range (ATR).
The indicator has seven lines that form a channel-like structure around the price action. It then plots a middle line, which is based upon a moving average line. The middle line is then drawn and three pairs of lines are plotted. The blue line is the nearest to the middle; the blue line is a notch from the skyblue line. The red line is the furthest from that line.
This indicator can be used to trade trend continuation strategies that are based on price action staying on either the upper or lower side of the channel.
It can also be used for trading mean reversal trades that are based on price action rejecting outer lines, particularly the red lines.
The ATR Channels Indicator algorithm starts with a moving-average calculation. The trader can choose the type of moving average line they prefer and the length of the periods it uses for calculations. This is what you use to plot the middle line. These parameters can be changed within the indicator settings.
The underlying ATR is also used to calculate the distance between the outer and middle lines. It multiplies the ATR using a preset multiplier and then subtracts that value form the moving average. These values are used to create points on the upper or lower lines of the channel. The multiplier is the greater the distance from the outer channel line that it plots.
You can modify several parameters in the ATR Channels Indicator's settings.
"PeriodsATR” refers to how many periods were used in order to calculate its underlying ATR value.
"MA_Periods", refers to the number and duration of periods used in calculating the moving average line.
"MA_type" lets users choose the type of moving average they want.
Users can modify the multiplier for each pair of outer channel lines by using "Mult_Factor1", Mult_Factor2 and "Mult_Factor3".
How to Enter?
Price action should always be above the middle line. When price action pulls back, open a buy order.
When do you want to exit?
When the price reaches the upper blue line, close the trade.
Price action should always be below the middle line. When price action pulls back, open a sell order.
When the price reaches the lower blue line, close the trade.
This indicator is useful for trading both trend continuation strategies as well as mean reversal strategy. It shows the price points at which price could reverse, based on average price movements. This indicator can be used to trade entry and exit.
ATR Channels Indicator MT4 is a Metatrader4 (MT4) indicator. Its purpose is to transform the accumulated historical data.
ATR Channels Indicator MT4 allows you to spot patterns and peculiarities in price dynamics that are not visible to the naked eye.
This information allows traders to assume additional price movements and adjust their strategies accordingly. Click Here for MT4 Strategies
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