The Hodrick-Prescott Channel Forex indicator for MT4 provides multiple trading signals daily and works great for scalpers and day traders.
Generally speaking, the indicator is a dynamic price channel based on the Hodrick-Prescott trading methodology.
The candlesticks are somewhat wrapped within the channel, and price entries and exits occur at the upper and lower channel bands.
In addition, the indicator also displays the spread and channel slope in real-time.
How to interpret the indicator?
- The trend is bullish when the Hodrick-Prescott Channel indicator is sloping up.
- In the bullish case, we will look to enter long near the lower band.
- The trend is bearish when the Hodrick-Prescott Channel indicator is sloping down.
- In the bearish case, we will look to enter short near the upper band.
Key Features
- Works well for scalpers & day traders
- Easy trading rules
- Multiple trade entries daily
- Dynamic trading channel
- Well worth adding to your indicator collection
The Hodrick-Prescott Channel indicator works best during the most volatile trading hours.
Free Download
Download the “Hodrick-Prescott Channel.ex4” MT4 indicator
Trading Chart
The USD/JPY 30-minute chart below shows the Hodrick-Prescott Channel indicator in action.
Basic Trading Signals
Signals from the Hodrick-Prescott Channel indicator for Metatrader 4 are easy to interpret and go as follows:
BUY:
- A buy signal is given when the price touches the lower band and the price channel is sloping up.
- Place a stop loss below the most recent swing low point.
- Take profit at the upper price channel band.
SELL:
- A sell signal is given when the price touches the upper band and the price channel is sloping down.
- Place a stop loss above the most recent swing high point.
- Take profit at the lower price channel band.
Download Now
Download the “Hodrick-Prescott Channel.ex4” MT4 indicator
Hodrick-Prescott Channel + Stochastic Oscillator Forex Strategy
This strategy uses the Hodrick-Prescott Channel Indicator to identify trend direction and price extremes, while the Stochastic Oscillator confirms momentum and potential reversals.
It helps traders find high-probability entries near channel boundaries.
Required Indicators
- Hodrick-Prescott Channel Indicator (available on this page)
- Stochastic Oscillator with settings %K=14, %D=3, slowing=3 (default MT4 indicator)
Timeframes
Works well on H1, H4, and Daily charts for swing and trend trading.
Buy Entry Rules
- Price touches or moves slightly below the lower Hodrick-Prescott channel line, indicating a potential support zone.
- Stochastic Oscillator is in the oversold region (below 20), and %K line crosses above %D line.
- Enter a buy trade on the next candle after these conditions are confirmed.
Sell Entry Rules
- Price touches or moves slightly above the upper Hodrick-Prescott channel line, indicating a potential resistance zone.
- Stochastic Oscillator is in the overbought region (above 80), and %K line crosses below %D line.
- Enter a sell trade on the next candle after these conditions are confirmed.
Stop Loss and Take Profit
- Stop Loss: Place it just outside the channel boundary beyond the entry point.
- Take Profit: Target the middle line of the Hodrick-Prescott channel or use a 1:2 risk-reward ratio.
Why This Strategy Works
The Hodrick-Prescott Channel effectively smooths price action to highlight cyclical trends and support/resistance levels.
The Stochastic Oscillator adds momentum confirmation to avoid premature entries, improving trade accuracy.
Adjustable Parameters & Settings
HP fast period, HP slow period, color of text label
Feel free to explore the indicator’s different parameters and settings to create your own personalized indicator setup.
Technical Information
Currency Pairs: works on any currency pair
Trading Platform: developed for Metatrader 4 (MT4)
Time Frames: works on any time frame
Indicator Type: buy/sell trading channel
How to install the Hodrick-Prescott Channel indicator in Metatrader 4?
- Copy and paste the Hodrick-Prescott Channel.ex4 indicator into the MQL4 indicators folder.
- You can access this folder from the top menu as follows:
- File > Open Data Folder > MQL4 > Indicators (paste here)
