Composite Index Indicator
Discover the powerful Composite Index Indicator for MT4. Use its divergence signals and SMA crossovers for precise trade entries. Customize settings to suit your strategy.
Description
The Composite Index indicator for MT4 combines the RSI with moving averages to better analyze the market. This way, traders can trade both RSI patterns, like divergences, with moving average patterns, like crossovers.
Therefore, when a divergence occurs between the RSI and the price, traders can wait for the fast moving average to cross above the slow moving average and confirm a reversal.
How to Use The Composite Index Indicator
Divergence on the chart occurs when the indicator moves opposite to the price. For instance, the chart below shows a bullish divergence, where the price is making a lower low while the RSI is making a higher low. This means the trend will likely change from bearish to bullish. You can enter a buy position when you see a moving average crossover, confirming the reversal. Place your stops below the previous low and targets depending on your risk-reward ratio.
Conclusion
The Composite Index indicator is a modification of the RSI. Traders can capitalize on the divergence signals that the indicator gives together with moving average crossovers. You can also change the inputs in the indicator settings to match your specifications.