The SMA Rainbow Trend forex indicator for Metatrader 4 is a very popular trend following indicator used by many traders in one or another way.
This version of the rainbow indicator consists of a set of simple moving averages.
Detecting the trend with this indicator is very simple…
The trend is considered to be trending up when all simple moving averages are pointing up.
The trend is considered to be trending down when all simple moving averages are down up.
Many crossover forex systems are built using the rainbow trend following indicator.
The AUD/CAD M15 chart below displays the SMA Rainbow Trend Metatrader 4 forex indicator in action.
Basic Trading Signals
Signals from the SMA Rainbow Trend MT4 forex indicator are easy to interpret and goes as follows:
Buy Signal: Open a buy trade when price is trading above all simple moving averages.
Place a stop loss below medium-term support or use your own preferred SL method.
Sell Signal: Open a sell trade when price is trading below all simple moving averages.
Place a stop loss above medium-term resistance or use your own preferred SL method.
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily, Weekly, Monthly
Copy and paste the SMA_Rainbow.mq4 indicator into the MQL4 indicators folder of the Metatrader 4 trading platform.
You can access this folder from the top menu as follows:
File > Open Data Folder > MQL4 > Indicators (paste here)