The Auto Trend Channel indicator allows you to quickly analyze the trends in the short and long term.
The indicator allows you to automatically plot channels and will help you achieve better trading results.
These lines act simultaneously as price levels and channel boundaries. They can be used to trade pending orders.
Once the indicator has been installed, the price channel will appear on your terminal’s screen. You can change the visual settings at your own discretion.
The lines’ thickness can also vary. It will change depending on your custom settings.
How does the Auto Trend Channel indicator work?
The trend chanel can affect the price in many different ways. You can tell the difference between true and false breakout. True breakouts are when the price moves within the channel for some time and then breaks the resistance line. True breakouts are confirmed by the transformation of resistance into support. The trader must wait for a new price channel in this instance.
The breakout is either false or not caused by the formation of one or more candles after the channel has been broken. True breakouts are when the price does not return to the trend channel. If the price does not move towards the resistance line in a bullish or support line in a bearish market, it is considered a breakout.
Clear boundaries between price channels are rarely observed. The price movement is often accompanied by a breakout that does not require confirmation. This is when the trader will need to use additional confirmation signals.
Trading strategy with Auto Trend Channel Indicator
Let’s look at the trading strategies that use Auto Trend Channel indicator.
Auto Trend Channel purchase setup
- Wait for the channel to open on the upside.
- Wait until the bullish candle has formed after the breakout
- Place the take profit at the horizontal resistance
- The stop-loss should be placed a few pips below trend channel’s upper boundary.
Auto Trend Channel sale
- Keep an eye out for a clear breakout on the channel to the downside.
- Wait until the bearish candle appears after the breakout
- Place the take profit at the horizontal support
- The stop-loss should be placed a few pips higher than the trend channel’s lower boundary.
Conclusion Auto Trend Channel indicator
Auto Trend Channel indicator makes it easier to create a channel on the chart. Automatic plotting of charts is possible. You can also create a trading strategy using the indicator. Before going live, however, you must test the strategy on historical data and a demo account.