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The Absolute Strength Indicator is a technical tool among MetaTrader 4 indicators that measures the relative strength of buyers and sellers. This indicator simultaneously provides insights into the intensity of bullish and bearish trends.
By analyzing price data and trading volume, the Absolute Strength Indicator determines the dominance of buyers or sellers in the market.
It helps identify which group has the upper hand at a given moment and how the overall market trend is shaping.
Indicator Table
The table below summarizes the key details of the Absolute Strength Indicator:
| Category | Volatile - Oscillator - Strength |
| Platform | MetaTrader 4 |
| Skill Level | Intermediate |
| Indicator Type | Leading - Trend-Following |
| Timeframe | Multi-Timeframe |
| Trading Style | Intraday Trading |
| Market | Forex - Cryptocurrency - Stocks |
Indicator in a Bullish Trend
In the 1-hour chart of USD/CHF, when the buyer strength line (green) moves above the seller strength line (red), it signals a bullish trend in the market.
At this point, traders can enter a buy position with reduced risk.
Indicator in a Bearish Trend
The following example illustrates the 30-minute chart of CAD/JPY. When the red line crosses above the green line from below, it indicates the beginning or continuation of a bearish trend.
Traders can enter a sell position after confirming their strategy.
Indicator Settings
The settings panel for the Absolute Strength Indicator is shown in the image below:
- Mode: Calculation mode for strength
- Period: Overall indicator calculation period
- Smoothing Period: Determines how frequently crossovers occur based on the break of lines
- Signal Period: Moving average calculation period (dotted line)
- MA Method: Selection of calculation methodology
- Applied Price: Defines which price type the indicator applies t
Conclusion
The Absolute Strength Indicator is a complementary tool in technical analysis, often used alongside volatility indicators MT4.
Simultaneously measuring the intensity of bullish and bearish trends provides valuable insights for traders, helping them assess the market direction effectively.
What is the Absolute Strength Indicator, and what is its purpose?
The Absolute Strength Indicator is a technical analysis tool designed to measure the relative strength of buyers and sellers and determine the dominant market trend.
How can traders use the Absolute Strength Indicator for trend analysis?
This indicator plots two lines representing buyer strength (green) and seller strength (red).
- When the green line is above the red line, it signals a bullish trend.
- When the red line is above the green line, it indicates a bearish trend.