About the Envelopes Reversal Signal Indicator
The Envelopes Reversal Signal Indicator for MT4 is designed to highlight potential market reversals using the Envelopes technical indicator.
It plots directional arrows directly on the price chart, allowing traders to spot reversal opportunities easily.
Buy and sell signals appear when price reacts to the outer envelope bands, suggesting temporary exhaustion within the current market move.
A green arrow signals a potential buying opportunity, while a red arrow signals a possible selling opportunity.
This Indicator performs best when used in alignment with the broader market trend.
Adjusting the Envelopes period helps control signal frequency, with higher values reducing noise and filtering weaker setups.
Free Download
Download the “envelope-reverse.mq4” MT4 indicator
Key Features
- Reversal-based buy and sell arrow signals
- Built on the Envelopes technical indicator
- Plots signals directly on the price chart
- Adjustable Envelopes period settings
- Supports scalping and day trading strategies
Indicator Chart
The image below shows the Envelopes Reversal Signal Indicator applied to a live price chart.
Green arrows indicate potential bullish reversals, while red arrows highlight possible bearish reversals near the envelope boundaries.
Guide to Trade with Envelopes Reversal Signal Indicator
Buy Rules
- Confirm the overall market trend is bullish
- Wait for a green reversal arrow to appear
- Enter a buy trade at the close of the signal candle
- Avoid buy signals during strong bearish conditions
Sell Rules
- Confirm the overall market trend is bearish
- Wait for a red reversal arrow to appear
- Enter a sell trade at the close of the signal candle
- Avoid sell signals during strong bullish conditions
Stop Loss
- Place the stop loss a few pips beyond the signal candle.
- Use recent price swings to define a logical risk level.
- Keep the stop tight to maintain a favorable risk profile.
- Exit the trade if price moves strongly against the signal.
Take Profit
- Close the trade when an opposite arrow signal appears.
- Secure partial profits once price moves decisively in your favor.
- Target nearby support or resistance levels if visible.
- Apply a fixed risk-to-reward ratio if preferred.
Envelopes Reversal Signal + Zero Lag MA Forex Day Trading Strategy
This day trading approach focuses on capturing intraday reversals that occur within a clear directional bias.
The Envelopes Reversal Signal Indicator provides the entry signals with a green arrow for buy setups and a red arrow for sell setups.
The Zero Lag Moving Average Indicator confirms the trend.
When the price moves above the Zero Lag MA, the market is considered to be in a buy trend. When the price drops below the line, it signals a sell trend.
This method is ideal for M15 and H1 time frames.
It suits day traders who want a structure that handles both reversals and trend continuation trades within the same session.
The Zero Lag MA filters out weak counter moves while the Envelopes Reversal Signal arrow highlights precise moments when the price is likely to turn back toward the trend.
Buy Entry Rules
- Price must be above the Zero Lag MA.
- A green arrow must appear from the Envelopes Reversal Signal indicator.
- Enter a buy trade at the next candle after the signal appears.
- Place the stop loss below the recent swing low or below the lower envelope band.
- Set take profit at the next intraday resistance level or exit when price closes below the Zero Lag MA.
Sell Entry Rules
- Price must be below the Zero Lag MA.
- A red arrow must appear from the Envelopes Reversal Signal indicator.
- Enter a sell trade at the next candle after the signal appears.
- Place the stop loss above the recent swing high or above the upper envelope band.
- Set take profit at the next intraday support level or exit when price closes above the Zero Lag MA.
Advantages
- Works well for day trading because it reacts quickly to reversals.
- The trend filter removes many weak counter-trend trades.
- Suitable for traders who prefer visual trade confirmation.
- Consistent across many forex pairs and sessions.
Drawbacks
- Reversal arrows can appear during noisy market phases.
- Large swings may increase stop loss distance.
- Not ideal during low volatility periods.
Case Study 1
On EURUSD H1, the price was above the Zero Lag MA, showing a clear buy trend.
At 10:15, the Envelopes Reversal Signal indicator gave a green arrow at 1.1025.
A buy trade was opened on the next candle at 1.1027.
Price moved steadily upward and reached the intraday resistance level at 1.1072.
The trade was closed for a profit of 45 pips.
The trend direction confirmed by the moving average made the reversal signal reliable and easy to follow.
Case Study 2
On GBPUSD M15, the price was below the Zero Lag MA, indicating a sell trend.
At 14:30, the Envelopes Reversal Signal indicator printed a red arrow at 1.2450.
A sell trade was opened on the next candle at 1.2448.
Price dropped quickly and reached the support zone at 1.2413.
The trade captured 35 pips in total.
The alignment of trend direction and reversal signal provided a clear and profitable intraday setup.
Strategy Tips
- Focus on sessions with good volatility for cleaner reversals.
- Check higher time frames to understand the broader direction.
- Avoid trading when the market drifts sideways for long periods.
- Use currency pairs with low spreads to keep costs down.
- Stay patient and wait for both the arrow and trend filter to match.
- Skip setups that appear too close to strong support or resistance zones.
- Keep an eye on upcoming news events because they can cause sudden reversals.
- Record your trades to learn which time frames and pairs perform best.
Download Now
Download the “envelope-reverse.mq4” Metatrader 4 indicator
FAQ
What Envelopes period works best?
Higher period settings generally reduce false signals. Many traders prefer values of 25 or above for better filtering.
Is this Indicator suitable for counter-trend trading?
It is primarily designed to trade reversals within the dominant trend rather than against it.
Can this Indicator be combined with other tools?
Yes. It works well alongside trend-following indicators to confirm overall market direction.
Summary
The Envelopes Reversal Signal Indicator offers a straightforward way to identify reversal opportunities near envelope extremes.
Its arrow-based signals simplify decision-making while keeping charts clean.
When used with proper trend confirmation and disciplined risk management, it provides a practical approach to capturing short-term market pullbacks.
