TC in MT4 has three indicators:
- Analyst View (AV) -- Direction and target price recommended by analysts
- Candlestick Patterns (AC) -- Buy and sell signals
- Adaptive Divergence Convergence (ADC) -- Buy and sell signals
A. - Following the trend recommended by analysts
Analyst View
TC recommends starting with the Analyst View, this indicator intuitively displays the direction and target price recommended by our analysts on the chart, with a detailed textual explanation of their viewpoint below.
- If our analysts' trend analysis indicates an uptrend, R1/R2/R3 are TC's target prices. (If the trend analysis suggests a downtrend, then S1 is the target price.) R1 represents a more conservative target, R2 is more aggressive. For risk management, investors generally consider closing half of their position upon reaching the first target price, and consider closing the remaining half upon reaching the second target price. R3 is a more distant resistance level, generally serving as a reference for short-term investment target prices.
- Another important point is the blue pivot point. If the market performs contrary to expectations and reaches the pivot point, analysts believe the market's viewpoint has reversed. Therefore, pivot points are usually set as stop-loss points.
- Then, S2/S3 represent the levels prices might reach if the market's viewpoint has already reversed. (If the trend is downward, then R2 would be the target price upon reversal)
In investing, technical analysis typically begins with considering the risk-reward ratio. If the risk is high but the reward is low, it's better to wait for a better price. If the risk-reward ratio is greater than 1.5, an operation can be considered. Simply put, it’s about what’s more cost-effective. If the investment's return is very small and the risk is high, then it’s not worth it.
After identifying the trend recommended by the analyst, investors can combine the Analyst View with the Candlestick Patterns or TC's proprietary ADC indicator. Both indicators have their advantages and can detect different buy and sell signals.
B: Considering buy and sell signals
i) Candlestick Patterns
You can start by moving the Candlestick Pattern indicator to the right side of the chart, to view it alongside the Analyst View.
The Candlestick Pattern indicator automatically searches for buy and sell signals, marking bearish signals in red and bullish signals in blue. Hovering over a signal will display its explanation.
TC recommends starting with the analysts' trend view, as the reliability of the Candlestick Patterns signals might be higher if they are in sync with the trend.
ii) ADC
Since both ADC and Candlestick Patterns indicators search for buy and sell signals, it's recommended to view the candlestick and ADC indicators separately.
TC developed its ADC indicator by combining MACD and RSI (Relative Strength Index). Although MACD is reliable, its responsiveness is comparatively low. The new technology indicator, ADC, is more responsive than MACD, increases signal frequency while maintaining MACD's stability.
The ADC indicator has three components. TC suggests focusing on the first indicator, Chart Price. Chart Price is the conclusion of the latter two and displays buy, sell, and exit signals on the chart intuitively. Similar to Candlestick Patterns, hovering over it will display the signal's explanation. If the direction of the ADC signals aligns with the analysts' trend view, their reliability is higher.
It's usually recommended that investors first determine the trend based on analysts' views, and then consider the timing for entering the market by referring to either the Candlestick Patterns indicator or the ADC indicator. If the analysts' view is bullish, the preference is generally to go long, focusing only on the bullish buy signals. Conversely, if the analysts' view is bearish, it is advised to focus only on the bearish trading signals.
