Introduction to the DC Signals Generator Indicator
Market Sentiment can be a very effective indication of how price action would move. The DC Signals Generator Indicator is a momentum indicator which is based on the bulls and bears market sentiment.
What is the DC Signals Generator Indicator?
The DC Signals Generator Indicator is a momentum-based signal indicator. It provides trade signals based on short-term price movements which indicate a possible momentum reversal.
This indicator plots a yellow star with red borders below a candle to indicate the “Upper Bound”, which can also indicate a bearish reversal. It also plots an aqua star with blue borders above a candle to indicate the “Lower Bound”, which can also indicate a bullish reversal.
It also has various elements such as the “Center Line”, which is placed opposite the yellow and aqua stars, and the “Settlement Price” which is the tomato colored box, which may indicate a possible slowing of the momentum.
How the DC Signals Generator Indicator Works?
The DC Signals Generator Indicator an underlying Bulls Power and Bears Power Indicator to detect the momentum direction. It also the close price with the open, high, and low price to qualify potential momentum reversal signals, all while incorporating tick volume within its criteria. The algorithm behind this indicator is quite complex since it has several layers of comparisons between the close price and the open, high, and low price.
How to use the DC Signals Generator Indicator for MT5
The DC Signals Generator Indicator has just one variable which can be modified within its input settings.
This variable refers to the number of bars from the historical price data in which the indicator would detect momentum reversals and plot its symbols.
Buy Trade Setup
When to Enter?
Open a buy order if the DC Signals Generator Indicator plots an aqua star with blue borders above a candle, in confluence with a bullish reversal price action. Set the stop loss below the Center Line (red dot).
When to Exit?
Close the trade if price action shows signs of a possible bearish reversal while the DC Signals Generator plots a Center Line symbol (red dot) above the candle.
Sell Trade Setup
When to Enter?
Open a sell order if the DC Signals Generator Indicator plots a yellow star with red borders below a candle, in confluence with a bearish reversal price action. Set the stop loss above the Center Line (red dot).
When to Exit?
Close the trade if price action shows signs of a possible bullish reversal while the DC Signals Generator plots a Center Line symbol (red dot) below the candle.
Conclusion
This indicator can be a very effective momentum reversal indicator. Its signals have the potential to produce trades with very good returns relative to the risk. However, it is not perfectly accurate. There would be instances wherein the trade signals would not produce a profit or would immediately reverse after just a small movement in the direction of the trade. For this reason, it is best to use this indicator merely as a confirmation of a trade in confluence with other technical indications.
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