About the Forecasting Moving Average Indicator
The Forecasting Moving Average Indicator for MT4 is a predictive technical tool that calculates the likely position of the moving average one candle in advance.
Unlike traditional moving averages that lag behind price, this indicator uses an internal algorithm to project future slope changes.
It provides traders with an early look at momentum shifts before the current bar even closes.
This is particularly useful for identifying the very beginning of a trend or detecting when a current move is losing steam.
By seeing the predicted direction of the next bar, traders can reduce the delay inherent in trend-following systems.
It serves as a lead signal for anticipating price direction in fast-moving markets.
Free Download
Download the “forecast-moving-average.ex4” MT4 indicator
Key Features
- Projects the moving average position one period ahead to minimize signal lag.
- Helps traders anticipate trend changes before they are reflected in standard indicators.
- Visualizes the slope of the future average to identify immediate momentum.
- Works efficiently for scalping and intraday trading on low timeframes.
- Provides a simplified view of market direction for quick decision-making.
Indicator Chart
The Forecasting Moving Average Indicator chart shows a dynamic line that tracks price action while extending its trajectory into the next candle space.
When the projected line points upward, it indicates an immediate bullish bias.
Conversely, a downward slope suggests the next move will likely be bearish.
This allows you to see the trend direction one step ahead of the current price.
Guide to Trade with Forecasting Moving Average Indicator
Buy Rules
- Observe the indicator line as the current candle approaches its close.
- Confirm that the indicator predicts the moving average will rise on the next bar.
- Ensure the price is trading above the current moving average line.
- Open a long position at the start of the new bar once the upward prediction is confirmed.
Sell Rules
- Monitor the indicator slope for a downward shift toward the end of a candle.
- Verify that the indicator predicts a lower moving average value for the upcoming bar.
- Check that price action is currently trending below the moving average.
- Enter a short trade immediately when the next bar opens with a downward forecast.
Stop Loss
- Place the stop loss a few pips below the most recent swing low for buy orders.
- Set the stop loss above the recent swing high for sell positions.
- Move the stop loss to the entry price once the predicted move begins to materialize.
Take Profit
- Exit the trade when the indicator predicts a flat or opposite move on the next bar.
- Target the next major support or resistance level on the chart.
- Use a fixed reward-to-risk ratio of at least 1:2 for consistent growth.
- Close the position if price crosses back over the moving average line.
Forecasting Moving Average Indicator Forex Strategy for MT4
This MT4 forex strategy combines the Forecasting Moving Average Indicator with the NRP Trend Signal Indicator to create a trend-following system.
The Forecasting Moving Average shows overall market direction, with price above indicating bullishness and below indicating bearishness.
The NRP Trend Signal adds a histogram for precise entries, confirming the strength and direction of the trend before taking trades.
This strategy works best on M15 and H1 charts and is suitable for major pairs like EURUSD, GBPUSD, and USDCHF.
It focuses on catching medium-term intraday or swing moves with confirmation from both trend direction and momentum.
Buy Entry Rules
- Price is above the Forecasting Moving Average, showing bullish bias.
- NRP Trend Signal histogram is green and above 0, confirming upward momentum.
- Enter a buy trade at the close of the candle where both conditions align.
- Place the stop loss below the recent swing low or just below the moving average.
- Exit the trade when the histogram turns red or falls below 0, or when price closes below the moving average.
Sell Entry Rules
- Price is below the Forecasting Moving Average, showing bearish bias.
- NRP Trend Signal histogram is red and below 0, confirming downward momentum.
- Enter a sell trade at the close of the candle where both conditions align.
- Place the stop loss above the recent swing high or just above the moving average.
- Exit the trade when the histogram turns green or rises above 0, or when price closes above the moving average.
Advantages
- Helps identify high-probability trades by combining trend direction and momentum confirmation.
- Clear visual signals reduce hesitation and make decision-making faster.
- Works well on multiple timeframes, making it suitable for intraday and swing trading.
- Helps avoid entering trades against the main trend.
- Easy to learn and follow, even for traders with limited experience.
- Supports disciplined risk management with logical stop placement.
Drawbacks
- Signals may lag during sudden price spikes or reversals.
- Less effective during sideways or low-volatility markets.
- Requires monitoring of charts to avoid late entries or exits.
- Stop losses can be hit during minor retracements if placed too tightly.
- Not ideal for thinly traded pairs where price moves erratically.
Case Study 1
On EURUSD M15, price was above the Forecasting Moving Average, showing a bullish trend.
The NRP Trend Signal histogram turned green above 0.
A buy trade was entered at candle close with the stop below the recent swing low.
Price continued higher, and the trade gained 35 pips before the histogram turned red, signaling exit.
Case Study 2
On GBPUSD H1, price was below the Forecasting Moving Average, indicating a bearish trend.
The NRP Trend Signal histogram turned red below 0.
A sell trade was opened at candle close with the stop above the recent swing high.
Price moved lower and the trade gained 79 pips before the histogram turned green, prompting exit.
Strategy Tips
- Look for confluence with nearby support or resistance levels to strengthen trade entries.
- Wait for a candle close confirming the moving average and histogram alignment before entering.
- Combine with higher timeframe trend analysis to avoid countertrend entries.
- Manage trades actively and be ready to exit if momentum weakens before reaching targets.
- Use trailing stops along the moving average to lock in profits during trending moves.
- Filter out trades when the histogram is flat or indecisive to reduce false signals.
- Review past sessions to identify typical price behavior near moving average levels for better timing.
Download Now
Download the “forecast-moving-average.ex4” Metatrader 4 indicator
FAQ
How accurate is the one-bar prediction for the Forecasting Moving Average Indicator?
The prediction is based on the current momentum and rate of change in price.
While it is highly effective in trending markets, its accuracy can decrease during low-volatility periods or “choppy” price action.
It is most reliable when the market shows a clear direction and high volume, allowing the algorithm to project the slope with more confidence.
Can I use the Forecasting Moving Average Indicator as a standalone system?
While the indicator provides a clear direction, it is best used alongside other tools like a momentum oscillator or price action levels.
Using it alone can lead to over-trading in ranging markets.
Combining the forecast with a break of a key horizontal level or a candlestick pattern increases the probability of a successful trade.
Does the indicator calculation change if I change the period?
Yes, adjusting the period changes the sensitivity of the forecast.
A shorter period will make the indicator highly responsive to every price tick, which is great for fast scalping but results in more false signals.
A longer period will smooth out the line and provide more stable forecasts for intraday trend following.
Summary
The Forecasting Moving Average Indicator is a valuable asset for traders who want to overcome the lag associated with traditional moving averages.
Its ability to predict the next bar’s slope gives scalpers a significant timing advantage in the forex market.
The indicator is easy to use and provides immediate feedback on market momentum.
While it requires a trending environment to perform at its best, it excels at keeping traders on the right side of the trend.
