The Rainbow Bars 2 trend trading indicator offers traders an innovative and effective method of utilizing a ribbon of moving averages to determine market trends. This powerful indicator uses the divergence of five moving averages to color price bars, providing a clear visual representation of market trends. This article will explore the unique features and benefits of the Rainbow Bars 2 MT4 Indicator and provide practical guidelines for incorporating it into your trading strategy.
Overview of the Rainbow Bars 2 MT4 Indicator
The Rainbow Bars 2 indicator is an interpretation of the moving average ribbon, designed to show the divergence of five moving averages relative to one another. The stronger the divergence, the richer the color of the candles, with upward divergence represented by colors ranging from yellow to red, and downward divergence represented by colors ranging from blue to dark blue.
Key Features of the Rainbow Bars 2 MT4 Indicator
- Divergence of Moving Averages: The Rainbow Bars 2 indicator displays the divergence of five moving averages relative to each other, offering a clear visual representation of market trends.
- Color-Coded Price Bars: The indicator uses color-coded price bars to represent the strength of the divergence, making it easy for traders to quickly identify market trends.
- Effective on Multiple Chart Types: The Rainbow Bars 2 indicator performs well on both regular and Renko charts, providing versatility for traders using different charting styles.
- Customizable Thickness of Colored Bars: The indicator allows users to set the thickness of colored bars, ensuring accurate alignment with the thickness of the symbol bars on their specific chart scale.
Understanding the Divergences in Rainbow Bars 2 Indicator
The Rainbow Bars 2 indicator presents various levels of divergence based on the relative positions of the moving averages. Understanding these divergences is crucial for effectively using the indicator in your trading strategy:
- Weak Positive Divergence: MA1 > MA2
- Stronger Positive Divergence: MA1 > MA2 and MA2 > MA3
- Average Positive Divergence: MA1 > MA2, MA2 > MA3, and MA3 > MA4
- Strong Positive Divergence: MA1 > MA2, MA2 > MA3, MA3 > MA4, and MA4 > MA5
- Weak Negative Divergence: MA1 < MA2
- Stronger Negative Divergence: MA1 < MA2 and MA2 < MA3
- Average Negative Divergence: MA1 < MA2, MA2 < MA3, and MA3 < MA4
- Strong Negative Divergence: MA1 < MA2, MA2 < MA3, MA3 < MA4, and MA4 < MA5
Incorporating the Rainbow Bars 2 MT4 Indicator into Your Trading Strategy
To effectively use the Rainbow Bars 2 MT4 indicator in your trading strategy, consider the following tips:
- Understand the Divergences: Familiarize yourself with the various levels of divergence in the Rainbow Bars 2 indicator, as this knowledge is essential for interpreting market trends accurately.
- Customize Colored Bar Thickness: Adjust the thickness of the colored bars to match the thickness of the symbol bars on your chart, ensuring a clear and visually appealing representation of market trends.
- Apply to Different Chart Types: Utilize the Rainbow Bars 2 indicator on both regular and Renko charts to benefit from its versatility and adaptability.
- Combine with Other MT4 Indicators: Enhance the effectiveness of the Rainbow Bars 2 indicator by using it in conjunction with other technical indicators, such as oscillators or trend lines, to confirm market trends and identify potential trade opportunities.
Conclusion
The Rainbow Bars 2 MT4 Indicator offers traders an innovative and effective tool for identifying market trends through the divergence of five moving averages. By color-coding price bars based on the strength of the divergence, the indicator provides a clear and visually appealing representation of market trends. With its versatility on different chart types and compatibility with other technical indicators, the Rainbow Bars 2 indicator can be a valuable addition to any trading strategy. By understanding the various levels of divergence and customizing the indicator’s settings to suit your preferences, you can harness the full potential of the Rainbow Bars 2 MT4 Indicator to enhance your trading performance and make more informed decisions in the ever-changing forex market.
Features of Rainbow Bars 2 MT4 indicator
- Platform: Metatrader 4
- Ability to change settings: Yes
- Timeframe: any from 1 Minute to Daily
- Currency pairs: any
In Rainbow-Bars-2.zip file you will find:
- Rainbow Bars 2.ex4
Download Rainbow Bars 2 MT4 indicator for free:
