The Trend Signal Version 2 Indicator represents a classic zigzag MT4 indicator for determining precise price swing positions. It applies a 9-period Shortened Statutory moving average that spots potential trend reversals in all market conditions.
The zigzag trendlines of the indicator show the direction of the current market trend. Besides, the arrows signal helps you anticipate buy/sell opportunities based on the projected trend.
Technically, the Trend Signal Version 2 Indicator is quite sensitive to price action changes and market volatility. So, verifying the arrow signals’ validity before considering a trade entry is essential.
Apart from market entries, you can also use the trend signal arrows to assess potential trade exit areas on the chart.
The Trend Signal Version 2 Indicator may often plot frequent trend reversal signals depending on market volatility. So, picking every arrow signal as a buy or sell setup may not be wise. Instead, we may consider other price-action factors to filter the indicator’s signals.
In the above price chart, GBP/USD was initially in a consolidation mode, forming a triangle pattern. Once the price exceeded the triangle resistance, the indicator plotted an uppish arrow showing a buy signal.
Apart from price-action patterns, we can also consider trendlines, support/resistance, and moving averages for assessing the validity of possible trading opportunities.
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Sell Signal Generation with Trend Signal Version 2 Indicator
In the above EUR/USD chart, we’ve spotted a horizontal resistance at 1.0191. The price repeatedly rejected the respective resistance indicating a possible bearish move ahead. For this reason, we’ll only consider sell opportunities in such market conditions.
At a point, the indicator plotted several down arrows below the resistance line, confirming a sell entry. As you can see, the price sharply declined following the rejection and sell signal below the resistance.
You can also apply trendlines to determine trend-following trading opportunities during an on-trend market.