PA Oscillator Indicator

Hello, fellow traders! It is no secret that trading with Price Action is profitable. But for forex beginners without experience, filtering setups can be quite difficult. In this difficult task, the PA Oscillator indicator is meant to help, specially designed for working with the Price Action methodology.

Platform: Metatrader 4
Currency pairs: EURUSD, GBPUSD, AUDUSD, USDJPY, EURJPY, USDCAD, USDCHF
Timeframe: H4 and above
Trading time: around the clock
Recommended brokers: Alpari, Roboforex

It is installed the same way as any other indicator; if necessary, you can review the standard installation guide.

For working with the indicator, the recommended timeframe is H4 and above. The optimal option is to use the daily timeframe (D1). In the screenshot above, you can see how the indicator is displayed on a daily chart. It appears as green and red bars near the zero line. Accordingly, a red bar indicates a negative tendency, and a green bar a positive one. The green and red bars of the indicator clearly show periods of rising or falling demand in this currency pair.

We are interested specifically in the first bar of the indicator when it crosses the zero mark, as it serves as a signal for a potential entry. Of course, only if one of the Price Action setups is present with support from a support / resistance level. This is a mandatory condition.

Please note that the indicator readings do not update after the candle closes, meaning the indicator does not repaint afterward. But we always wait for the current candle to close.

When using the PAOscillator indicator, note that it will be most effective when paired with support and resistance levels and candlestick patterns, that is, additional signs signaling a favorable moment to enter the market. It significantly increases the chances of making a profitable trade, but it is not an unambiguous and 100% sufficient signal for deciding to buy or sell.

When working with this indicator, you may encounter a situation where the indicator's signal bar is very weakly expressed (you can see an example of such a signal in the screenshot, during August 2012). In that case, the PAOscillator readings may be imprecise or erroneous, which is related to an unstable tendency of the currency price increasing or decreasing, and therefore the tendency shown by the indicator cannot be predicted to continue with sufficient confidence.

If there is no clear upward or downward price movement for some period of time, the indicator readings should simply be ignored, since the very essence of the method is based on analyzing the dynamics of price changes, and an indication in a flat market will most likely be incorrect. Using PAOscillator data is more effective when entering with the trend, when you see a specific price movement tendency. I advise beginners to watch the lesson on determining the trend on our website.

Let's look at several entry examples based on levels. In the screenshot above, you can see several potential trades filtered by the PAOscillator indicator. Let us consider them: 1) Sell: A breakout of an inside bar from a level + the indicator changes color to red; 2) Another sell trade: the Rails pattern from a level + the indicator turned red; 3) A pin bar after a strong trend is a risky entry, but the red bar of the PaOscillator indicator suggested that this trade could still be taken; 4) Triple top + support from a level + the indicator changes to red. Buy: 5) A pin bar with confirmation, breakout, and consolidation at the level; 6) bullish engulfing with support from the level. The buys are confirmed by the indicator histogram changing to green.

To correctly set loss limits (stop loss) and profit targets (take profit) according to the Price Action rules, watch the video lessons dedicated to setups, as well as the lesson "Exit Strategies."

Thus, the PA Oscillator indicator is an excellent assistant when trading Price Action in Forex. Combined with candlestick patterns, it is highly likely to provide objective information about the tendencies of the selected currency pair and will allow you to assess the situation clearly and conveniently when deciding whether to enter or exit a trade.

Respectfully, Andrey aka Soul_x TradeLikeaPro.ru

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