True Range Envelope MT4 Indicator – Free MT4 Indicator

The True Range Envelope MT4 Indicator uses three bands that can be likened to the Bollinger bands, to identify areas of support and resistance in price action. However, we will combine the use of trend lines to further strengthen the support and resistance areas to provide basis for reversal trades.

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True Range Envelope MT4 Indicator Strategy and Trading Rules

The True Range Envelopes MT4 indicator consists of three bands: upper, middle and lower bands. The upper band serves as a mobile resistance and the lower band serves as a mobile support. Due to the fact that these key areas are not fixed but dynamic, they can lead to false signals. So we use trend lines to strengthen these key areas.

The trend lines are used to trace highs of price action up to the upper band, and also to trace the lows of price action to the lower band. These lines must be able to touch at least three areas where candles have either made highs or lows. Where the final candle touches the upper band without closing above it or touches the lower band without closing below it, then the signal can be traded in reverse direction to the price movement.

True Range Envelope MT4 Indicator – Long Trade Entry Rules

A long trade entry is possible when the following setup is displayed on the chart:

• Price is in a downward trend, and a trend line can be traced across several price lows to the lower indicator band.
• The final candle in view touches the lower indicator band without closing below it.
• When the next candle opens, allow it to pullback to the lower band and use a BUY LIMIT order to take the trade, using the price at the lower band as the entry price. This will allow for a very precise entry which does not give away pips to the market.

In this chart, we see the areas where a trend line can be drawn across price lows all the way to the lower band. Since this line is drawn when price yet to get to the lower band, vigilance is requires to ensure that the price actually respects this trend line to the lower band. At the lower band, the last candle must touch the lower band but close above it, as is displayed by the doji candle. The next candle following this is the entry candle.

Stop Loss and Take Profit Settings

The setting of the stop loss is guided by the trend line and the candle lows. The stop loss should be located below the low of the entry candle. It is logical to use between 20-30 pips as the stop loss setting.

The Take Profit point will naturally be at the next key area of resistance, which is at the upper band. However, price action may occasionally stall and even reverse at the middle band. Therefore, for utmost safety of the trade, a trailing stop should be set once price has attained a distance of 15 pips above the middle band, so that the price action can either be followed to the upper band, or the trade can be closed in protected profit by retreating prices.

True Range Envelope MT4 Indicator – Short Trade Entry Rules

A short trade entry is possible when the following setup is displayed on the chart:

• Price action is in an upward trend, and a trend line can be traced across several price highs to the upper indicator band.
• The final candle in view touches the upper indicator band without closing above it.
• When the next candle opens, allow it to pullback to the upper band and use a SELL LIMIT order to take the trade, using the price at the upper band as the entry price. This will allow for a very precise entry which does not give away pips to the market.

Once more, we see that the key to this setup is to ensure that the trend line is traced across several price highs leading up to the upper band. The candle at the upper band can touch the band, but must not close above it. The reinforcement of the trade setup shown above is the bearish engulfing pattern that is formed by both the signal candle and entry candle at the upper band.

Stop Loss and Take Profit Settings

Due to the fact that a trade setup such as this means that no highs are likely to form after entry, the stop loss can safely be applied at 20-30 pips above the entry price.

The Take Profit point will naturally be at the next key area of support, which is at the lower indicator band. A trailing stop should be set once price has attained a mark which is 15 pips below the middle band so that retreating prices do not negate the profitability of the trade.

True Range Envelope MT4 Indicator Recommended Time Frames

Technically speaking, you can use this indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.

Average True Range Video Tutorial

Average True Range Video Tutorial

True Range Envelope MT4 Indicator Download

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