Tunnel Indicator produces a tunnel using multiple bands of different parameters which represent the price-sensitive areas of the market.
These areas are important because markets often tend to consider such areas as the place from where they decide the direction of their next movements.
Tunnel Indicator is a versatile trading indicator. It can be applied to trade all kinds of forex currency pairs around the market. Moreover, it fits great with all sorts of timeframe charts within the Metatrader4 trading platform.
Tunnel Indicator Overview
After the installation of Tunnel Indicator at the MT4 platform, your trading chart will appear like the following image:
Breaking down the Tunnel Indicator
This Indicator is formed with a combination of 8 bands of various parameters. Top 4 bands work as a potential area of support as price often bounces upwards from these levels creating opportunities to go long. These levels can also be used to define bullish breakouts of the market.
The last 4 bands at the bottom work as resistance levels and you’ll see price often used to jump downwards from these areas while in a bearish trend. You can also put a sell stop just below the lowest band to activate your sell entry with a possible bearish breakout setup.
Also Read: Trend Magic Indicator
Tunnel Indicator: Trade Conditions
- Price remains above all the indicator bands
- A bullish bar is formed right above the top band
- Buy triggers when the high of the respective signaling bar is broken by the following candles
- Set stop loss below the Tunnel Indicator area
- Exit long/ take profit once your trade hits at least the 1:2 risk to reward ratio
- Price remains below all the indicator bands
- A bearish bar is formed right below the lowest band
- Sell triggers when the low of the respective signaling bar is broken by the following candles
- Set stop loss above the Tunnel Indicator area
- Exit short/ take profit once your trade hits at least the 1:2 risk to reward ratio