Trend Strength Indicator MT4 & MT5 How Does It Work & What Is It?

Understanding how a market is performing will require you to make the most of underlying trading features and overall analysis. If you’re able to spot the latest trend, the next step is figuring out the strength of that trend. This will enable you to identify whether it’s the right time to buy or sell or whether you’re better off delaying any action. The ability to assess trend strengths will provide you with an overarching ability to recognise whether support and resistance levels will hold, if a reversal may well be on the cards, or if you can expect the current trend to continue.

How can I make the most of the trend strength indicators?

Thus, it’s clear from the get-go that you will be able to analyse a fair amount once you have managed to utilise trend strength indicators on MT4 and trend strength indicators on MT5. With the comprehensive charting capabilities on the CAPEX platform, you’ll quickly come to find that you can make the most of these indicators when assessing trends across various markets and subsequent instruments.

There are various trend strength indicators that have been adopted by online traders. This gives you the ability to properly assess whether a trend is going to persist or reverse. Below, we’ve outlined 3 different indicators and how you can utilise these indicators on the CAPEX site.

High and lows

You can utilise the Dow theory and assess the market structure by looking at the highs and lows. Right off the bat, you’re able to draw some conclusions on the latest trend and whether these trends may well reverse. Bullish trends can be identified with “higher highs, and higher lows” while it’s possible to see where a range comes into play (where this pattern does not appear). The ability to assess price movements via our charts in real time will enable you to make sense of the strength of a trend. Ultimately, such an indicator will potentially enable you to identify when “higher highs” stop occurring; leading to a possible reversal in the price movement.

ADX

Another popular trend strength indicator is the Average Directional Movement Index (ADX). This indicator is represented by a green line and a red line. Whenever the red line is above the green line, a downwards trend; and vice-versa. Assessing the actual strength of the trend comes down to making sense of the space between the two lines. The further apart, the stronger the trend. This indicator is easy to read and interpret but keep in mind that it is usually combined with another indicator. Applying the latest ADX indicator on the CAPEX platform will provide you with the ability to quickly assess the latest trends on all types of CFD trading options – from shares to Forex.

Bollinger Bands

This type of trend strength indicator is multi-functional and you’ll come across it in various markets, for various reasons. However, for the purposes of this guide, we’ll assess how you can utilise Bollinger Bands in an effort to identify the strength of a trend.

Bollinger Bands, as the name suggests, consists of two volatility bands with a band in the middle representing the moving average. If a trend is in place, then you’ll come to find that the price stays inside the two volatility bands. If the trend is upwards, it’ll be above the moving average while a downward trend will mean the price remains below the moving average. If price doesn’t reach the outer bands, this can be a signal indication that the trend is changing as momentum has faded considerably. Bollinger Bands can be used on the CAPEX platform and applied across the numerous markets on hand.

If you are looking to assess the trends in currency markets, then our trading signals will provide you with great insights. For example, understanding the latest trends in Forex markets may well be easiest using the Bollinger Bands indicator. This indicator provides users with insightful tips on price and volatility. There are a number of additional uses that this indicator possesses. One such use, and pivotal to success in the Forex market, is being able to assess when a currency is overbought or oversold. As we’ve outlined, you’ll be able to utilise the Bollinger Bands indicator when assessing the latest trends on 55 different Forex pairs at CAPEX.

Make use of the ADX indicator on the CAPEX platform

If you are looking to trade in share CFDs, you can also make use of the ADX indicator. It’s especially useful to beginners who are yet to grapple with more complex indicators. The simplicity of ADX will provide you with the much-needed insights without having to feel as if you might be misassessing the market at play. Bear in mind that the CAPEX trading platform allows you to run 10 charts simultaneously. This will allow you to use a variety of indicators on multiple charts. All of which will provide you with the tools and knowledge required to analyse the latest trends and clarify which trades seem most viable.

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