Beginner Indicator MT4 | MT5

As a beginner or even a professional trader, identifying support and resistance levels is the first thing to do in a trading chart before any complex analysis. The Beginner indicator is designed to help beginners determine these key levels by displaying red and blue dots to indicate respectively price highs and lows.

Furthermore, this trend-following indicator can be used for two simple trading strategies, trend continuation and reversal:

• Trend continuation:

- During an uptrend, if the price breaks above the last high (resistance), that confirms the continuation of the bullish movement and the trader should enter long.

- During a downtrend, if the price breaks below the last low (support), that confirms the continuation of the bearish movement and the trader should enter short.

• Potential reversal:

- During a bullish movement, if the price breaks below the last low (support), that signals a potential bearish reversal. The trader should exit his long position and enter short.

- During a bearish movement, if the price breaks above the last high (resistance), that signals a potential bullish reversal. The trader should exit his short trade and enter long.

To highlight, beginners should understand that this indicator can't be used for actual trade signals. They should wait for a confirmation to use one of the strategies.

In the EURUSD chart example on MetaTrader 4, during the uptrend, the price has broken above the resistance levels (determined by using the red dots) several times confirming the continuation of the bullish movement. At the trend's end, as we already know the support levels are marked by blue dots, and when the price breaks below this level that suggests a bearish reversal. That's exactly what happened in our trading example, and traders in this situation should exit their long positions and enter short for the EURUSD. 

In the GBPJPY chart example on MetaTrader 5, during the downtrend, the price has broken below the support levels (determined by using the blue dots) several times confirming the continuation of the bearish movement. At the trend's end, as we already know the resistance levels are marked by red dots, and when the price breaks above this level that suggests a bullish reversal. That's exactly what happened in our trading example, and traders in this situation should exit their short trades and enter long for the GBPJPY. 

After mastering this indicator and understanding how to use the support and resistance levels in trading, beginners can move to other categories of technical analysis indicators, available for FREE on our platform, to avoid false breakouts.