Target Bands Indicator is a short-term swing trading indicator. It closely monitors the changes in price action over the selected period of data and calculates it to define the overbought/oversold areas of the market.
Once such an area is confirmed, it plots star circles as trade signals according to the market momentums. Target Bands work on all kinds of forex currency pairs but suits well with shorter timeframe charts like M5 & M15.
Target Bands Indicator is quite easy to understand and apply since it uses a very simple technique to demonstrate the trade signals. As a simple indicator, it offers good advantages for the newbie swing traders.
Target Bands Indicator Overview
After the installation of the Indicator at the mt4 platform, your trading chart will appear like the following image:
Target Bands Indicator Explanation
Target Bands Indicator applies a 55-day moving average calculated based on the weighted close method and uses a deviation in order to plot the upper and lower bands of the indicator.
The upper band represents the overbought area of the market – a place where sellers go for short entries and buyers exit from long trades.
The lower band is the area of the oversold level of the market where buyers would like to go for long entry and sellers would like to exit from short positions.
For better understanding, the indicator plots star circles around the price candles as trade signals.
Target Bands: Buy Conditions
- Price hits the lower Target bands
- A star circle is plotted below the price candle at the same time
- A buy can be triggered right above the lower Target bands
- Set stop-loss right below the oversold area
- Exit long/take profit whenever price hits the overbought level and a star circle is plotted above the price candle’s high
Also Try: XM Forex Broker
Target Bands: Sell Conditions
- Price hits the upper Target bands
- A star circle is plotted above the price candle at the same time
- A sell can be triggered right below the upper Target bands
- Set stop-loss right above the overbought area
- Exit short/take profit whenever price hits the oversold level and a star circle is plotted below the price candle’s low