3 EMA Crossover Indicator for MT4

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3 EMA Crossover Indicator for MT4

Introduction to the 3 EMA Crossover Indicator

One of the most basic ways traders identify potential trend reversals using technical indicators is with the use of moving average crossovers. Often traders would use a pair of moving averages for this.

The 3 EMA Crossover Indicator uses the same concept of moving average crossovers but it also adds a third moving average line which adds another layer of confirmation for the trend reversals.

What is the 3 EMA Crossover Indicator?

The 3 EMA Crossover Indicator is a trend following technical indicator which indicates trend direction using bars.

This indicator plots bars on its own indicator window and these bars change color to indicate trend direction. It plots green bars to indicate a bullish trending market, red bars to indicate bearish trending market, and orange bars to indicate an indecisive market.

The bars also tend to be binary. Its size does not adjust based on the strength of the trend. It only changes color to indicate trend direction.

3 EMA Crossover Indicator for MT4

How the 3 EMA Crossover Indicator Works?

The 3 EMA Crossover Indicator uses three underlying Exponential Moving Average (EMA) lines to identify trend direction. If its algorithm identifies that the fastest moving average line has the highest value and its slowest moving average has the lowest value, the indicator will plot a tall green bar indicating a bullish trend. If it identifies the fastest moving average line has the lowest value and the slowest moving average line has the highest value, it will plot a tall red bar to indicate a bearish trend. If the three indicators have none of these patterns, then it would plot a short orange bar to indicate indecision.

How to use the 3 EMA Crossover Indicator for MT4

This indicator has three variables which traders can use to modify its sensitivity.

The “MaPeriod1”, “MaPeriod2”, and “MaPeriod3” variables all refer to the number of bars used on the underlying moving average lines. The “MaPeriod1” controls the fastest moving average line, the “MaPeriod2” controls the middle moving average line, while the “MaPeriod3” controls the slowest moving average line.

How the 3 EMA Crossover Indicator Works

This indicator can be used either as a trend direction filter or as a trend reversal signal indicator.

As a trend direction filter, traders can trade trend continuation setups trading exclusively in the direction indicated by the bars.

As a trend reversal signal indicator, traders can use the changing of the color of the bars as a trend reversal entry signal.

Buy Trade Setup

When to Enter?

Open a buy order as soon as the 3 EMA Crossover Indicator plots a tall green bar. Set the stop loss on the support below the entry candle.

When to Exit?

Close the trade as soon as the bars change to orange or red.

How to use the 3 EMA Crossover Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Open a sell order as soon as the 3 EMA Crossover Indicator plots a tall red bar. Set the stop loss on the resistance above the entry candle.

When to Exit?

Close the trade as soon as the bars change to orange or green.

How to use the 3 EMA Crossover Indicator for MT4 - Sell Trade

Conclusion

Although this indicator can be used as a trend reversal signal indicator, the signals it produces is not 100% perfect. It would still be best to use these signals in confluence with other technical indications and trade setups preferably on the long-term.

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