Band Moving Average — Pull-Back Indicator

One of my site’s visitors offered an interesting idea of a MetaTrader indicator to me. At first glance, the indicator is very simple and quite useless. The general idea was to modify the standard Moving Average indicator that comes with MT4, so that the two more bands would be added to it. One band should be below the main line by 2% and the other — above by 2%. Then this indicator could be used as a pull-back detector: when the price breaks through the upper band on the long-term bearish trend — it is a signal to sell, and when the price breaks through the lower band on the long-term bullish trend — it is a signal to buy. I have made this idea into the real MT4 indicator — Band Moving Average (BMA). It is a standard MT4 Moving Average indicator with those two bands added and an additional parameter (Percentage) to set the difference between the main line and the bands (2% by default). Now you can download it for free from my site. Here is how it looks when you attach it to the chart:

The author of this indicator’s idea suggests the following strategy for using it:

  • Attach it to EUR/USD M30 chart using simple MA with 49 period and set the Percentage to 2.0 — those are default settings.
  • When the long-term trend of the currency pair is bearish, sell if the price closes above the upper band.
  • When the long-term trend is bullish, buy if the price closes below the lower band.

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