Renko Donchian Channel Reversal applies a swing forex trading strategy to plot reversal trade signals for its users. This trading system has been designed for short-term trading purposes thus, suits great with M1 to M15 timeframe charts to facilitate the forex scalpers.
This Indicator can be applied to trade all kinds of forex currency pairs. Moreover, its simplicity of use offers great advantages in reading and understanding the trade signals, especially for newbie traders.
Renko Donchian Channel Reversal Overview
Once you’re done with the installation of the indicator at the MT4 terminal, your trading chart will appear like the following image:
Renko Donchian Channel Reversal Anatomy
- Ay Donchian Channel: This channel is formed using 3 dynamic bands. The upper and lower band works as dynamic resistance and support respectively. The mid-band indicates the direction of the current trend like moving averages. Price closing above its level signals bullish bias and closing below its level indicates a possible bearish movement of the market trend.
- CCI: CCI stands for Commodity Channel index. CCI value above 100 represents the bullish momentum of the market. CCI value that turns below -100 signals the bearish momentum of the market.
- Awesome Oscillator: Mostly works as a momentum signal filter. Awesome Oscillator turns positive to confirm the bullish momentum of the market and turns negative to validate the bearish thrust of the market momentum.
Also Read: How to Trade the Head and Shoulders Pattern
Renko Donchian Channel Reversal: Buy Conditions
- Price breaks the upper Ay Donchian Channel
- CCI value reaches above 100
- Awesome Oscillator turns positive
- Buy triggers when the above conditions are met
- Set stop loss below the lower Ay Donchian Channel
- Exit long/take profit whenever CCI value drops below 100
Renko Donchian Channel Reversal: Sell Conditions
- Price breaks the lower Ay Donchian Channel
- CCI value reaches below -100
- Awesome Oscillator turns negative
- Sell triggers when the above conditions are met
- Set stop loss above the upper Ay Donchian Channel
- Exit short/take profit whenever CCI value rises above -100