The WATR Metatrader 4 forex indicator is a simple trend indicator that clearly paints the direction of the current trend.
The WATR indicator can also be deployed within a breakout forex trading system.
It is a convenient technical indicator that is displayed within the chart window as coral and dodger blue lines that alternate their positions along price bars.
The coral line stays below the candlesticks, while the dodger blue line is seen above the candlesticks.
The WATR indicator is an offshoot of the Average True Range indicator.
Free Download
Download the “watr.ex4” MT4 indicator
Indicator Chart (EUR/USD M30)
The EUR/USD M30 chart below displays the WATR Simple Trend Metatrader 4 forex indicator in action.
Basic Trading Signals
- Buy Signal: Go long when the WATR Metatrader 4 forex indicator pops up a coral colored line that is aligned somewhat below the candlesticks.
- Sell Signal: Go short when the WATR Metatrader 4 forex indicator pops up a dodger blue line that is positioned slightly above the candlesticks.
- Exit buy trade: Close all buy orders while a bullish trend is ongoing, the WATR indicator displays a dodger blue line above the price bars.
- Exit sell trade: Close all sell orders while a bearish trend is running, the WATR indicator puts on display a coral line below the candles.
Tips: The WATR indicator can be used as a standalone technical tool.
When formulating a breakout strategy, it can also tell us when the price is about to break from a psychological level based on other parameters (like the information from pivot points).
WATR Simple Trend + RSI Triple Stochastic Divergence Forex Day Trading Strategy
This strategy combines the WATR Simple Trend MT4 Indicator with the RSI Triple Stochastic Divergence Indicator MT4.
The WATR Simple Trend displays two lines: a dodger blue line, which signals a bearish trend, and a coral line, which signals a bullish trend.
Meanwhile, the RSI Triple Stochastic Divergence indicator plots a histogram:
When the bars are blue and above zero, it generates a buy signal; when they are red and below zero, it gives a sell signal.
By combining trend direction from WATR with momentum divergence from the RSI‑stochastic tool, this strategy filters entries and helps capture clean day trades in line with broader market strength.
This day trading method is designed primarily for intraday timeframes such as M15, M30, or H1.
It is well-suited for traders who want to take trades during active market hours (e.g., London or New York) while being selective: only entering when both the trend filter and the divergence signal agree.
This reduces noise, improves risk management, and helps identify high‑probability setups.
Buy Entry Rules
- The WATR Simple Trend coral line must be above the dodger blue line (i.e., the trend must be bullish).
- The RSI Triple Stochastic Divergence histogram must turn blue and be above zero, indicating a bullish divergence or strong upward momentum.
- Enter a long position at the close of the candle on which that blue histogram bar appears (provided the trend condition is still valid).
- Place the stop loss just below the most recent intraday swing low, on the same timeframe.
- Set take profit at a 1:1 risk‑reward ratio, or use a trailing stop if the coral line continues to rise and the trend remains strong.
Sell Entry Rules
- The WATR Simple Trend dodger blue line must be above the coral line (i.e., the trend must be bearish).
- The RSI Triple Stochastic Divergence histogram must turn red and drop below zero, signaling bearish momentum or divergence.
- Enter a short position at the close of the candle that produces the red bar, assuming the trend condition has not reversed.
- Place the stop loss just above the most recent high on the same timeframe (intraday swing high).
- Use a take profit target equal to your risk (1:1), or trail using a stop if the blue WATR line continues to maintain the downward trend.
Advantages
- The WATR Simple Trend line provides a clear and visual trend filter, reducing counter‑trend trades.
- The RSI Triple Stochastic Divergence histogram gives momentum entries with divergence potential, which can catch reversals or strong pushes.
- Works well on intraday charts, offering multiple trade opportunities each session.
- Defines risk and reward clearly through stop loss and take profit or trailing stop techniques.
- Helps avoid noise by requiring both trend and momentum confirmation before entering.
Drawbacks
- In choppy or sideways markets, the WATR lines may cross frequently, leading to ambiguous trend signals.
- Divergence signals may lag price when momentum shifts very quickly, causing late entries.
- Tight intraday stop losses may be hit frequently if volatility spikes suddenly.
- Trailing stops can be difficult to manage manually, especially on lower timeframes like M15.
- Requires continuous attention during the trading session to catch both trend alignment and histogram signals.
Example Case Study 1
On the EUR/USD M30 chart during the London‑New York overlap, the coral WATR line climbed above the dodger blue line, signaling a bullish trend.
After a mild pullback, the RSI Triple Stochastic Divergence histogram printed a blue bar above zero, indicating growing upward momentum.
A long trade was taken at the close of that bar. The stop loss was placed just below the most recent M30 swing low.
As the price moved higher, the coral line remained above the blue line, confirming trend strength, and a trailing stop was used to lock in profits.
The trade closed later in the day for a solid gain as EUR/USD extended its up-move.
Example Case Study 2
On GBP/JPY H1, the WATR Simple Trend dodger blue line rose above the coral line, indicating a bearish trend.
After some consolidation, the RSI Triple Stochastic Divergence histogram turned red and dropped below zero, giving a sell signal.
A short position was opened at the close of the red bar. The stop loss was placed just above the recent swing high, and the take profit was set equal to the risk taken.
Price declined over the next few hours, and the trade hit its take-profit target neatly.
This shows how momentum confirmation plus a trend filter can be effective on a volatile cross like GBP/JPY.
Strategy Tips
- Prefer sessions with stronger volatility for clearer trend and divergence signals.
- Avoid trading when WATR lines are very flat or intertwined because that’s often a sign of indecision rather than a strong trend.
- Use lower leverage and smaller position sizes on divergence trades, because divergence can produce false or weak moves.
- If a blue histogram bar appears but the WATR trend is weakening (coral line falling toward blue), consider passing on that trade.
- Maintain a trading journal to note which currency pairs (for example, USD/CHF, AUD/USD) respond best to this setup and during which hours.
Download Now
Download the “watr.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart pattern indicator
Customization options: Variable (WATR_K, WATR_M, ATR), width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: trend
