Target Bands Indicator
The Target Bands indicator for MT5 is a channel-type technical trading tool that determines the optimal zone for a trend reversal.
Description
The Target Bands indicator for MetaTrader 5 is a channel-type technical trading tool that determines the optimal zone for a trend reversal. It has upper and lower bands that serve as exhaustion (overbought/oversold) zones of price. In other words, the price is likely to reverse when it touches any of the bands. Moreover, price tends to return to the bands after a breakout.
The indicator was built using an algorithm that uses a default analysis period of 55 bars to evaluate past price behavior and identify a potential trend reversal zone. In addition, it also has a buy/sell entry signal star. A star above/below the candle indicates a buy/sell signal.
Moreover, the indicator is suitable for scalpers and day/intraday Forex traders. However, it is recommended to be used in conjunction with price action/other technical indicators to enhance trading performance.
How to Trade With the Target Bands Indicator
The image below shows the action of the indicator on the EURUSD currency pair on the H1 timeframe. He demonstrates how to combine an indicator signal with price action to identify a high-probability setup.
First, the image showed that price broke out of the lower band, creating multiple sharp deviations, suggesting a potential trend reversal. Secondly, the indicator drew a buy entry and the price returned to the bands, which once again indicates an imminent trend reversal. Finally, the price has formed a bullish engulfing pattern, which confirms the opening of a buy position.
The above principle was also applied to determine the sell setup and entry.
Conclusion
The Target Bands Indicator for MT5 is a highly sensitive technical tool suitable for identifying trend reversals. Finally, you can download it for free today.