Tunnel Indicator is a complete trading system that helps traders to identify the direction of the trend and also provide levels for taking entry and exits from the trades. Most traders do the mistake of trading short-term movies and ignoring the longer-term trends in the price action.
This indicator is based on Long term Moving averages which can be used to capture sustainable trends in the Forex market. Let us try to understand the working of this trading system through some examples.
Tunnel Indicator Overview
Moving averages are calculated by taking the simple average of the closing price. Short term moving average gives an indication of the intraday trend and the long term moving average gives an idea about the long term trends in the market.
The advantage of using long term moving average is that it gives more accurate and less false signals. In this trading indicator moving average of 144 along with a moving average of 169 is used.
If the price moves above the long-term moving average then the trend is up and if the price is below the long-term moving average then the trend is down.
Tunnel Indicator Explanation
When moving average 144 moves above the moving average of 169 then traders should look for long trades and if the moving average 144 moves below the average of 169 then traders should look for short opportunities.
Upper and lower Tunnels are plotted in line with Moving averages which can be used as support and resistance. This indicator is useful in the 15-minute time frame in all forex pairs.
Also Read: Ultimate Oscillator with Envelopes
Tunnel Indicator: Buy Conditions
- Price should trade above the 144 and 169 moving average.
- The slope of both moving averages should be up.
- 144 Ma should move above 169 MA.
- Breakout of the upper band is the entry criteria.
- Traders can place a stop loss below the 169 MA.
Tunnel Indicator: Sell conditions
- Price should trade below the 144 and 169 moving average.
- The slope of both moving averages should be Down.
- 144 Ma should move below 169 MA.
- Breakout of the Lower band is the entry criteria.
- Traders can place a stop loss above the 169 MA.