The Momentum Reversal indicator for mt4 (Metatrader 4) is based on momentum and identifies trend reversals for any currency pair and time frame.
The indicator appears as a colored trend bar histogram in a separate MT4 chart window.
Buy & Sell Trade Example
- Open a buy trade as soon as the first histogram bar crosses the 0.00 level bottom-up.
- Open a sell trade as soon as the first histogram bar crosses the 0.00 level top-down.
The Momentum Reversal indicator can be used for both trade entry and exit signals.
The indicator works equally well on all currency pairs (majors, minors and exotic) and shows promising results if used correctly.
Free Download
Download the “momentum-reversal-detector.mq4” indicator for MT4
Indicator Chart (EUR/USD H1)
The picture below shows the Momentum Reversal mt4 indicator in action on the trading chart.
Tips:
Feel free to use your own favorite trade entry, stop loss and take profit method to trade with the Momentum Reversal Forex indicator.
As always, trade in agreement with the overall trend and practice on a demo account first until you fully understand this indicator.
Please note that even the best trading indicator cannot yield a 100% win rate over long periods.
Indicator Specifications & Inputs:
Trading Platform: Developed for Metatrader 4 (MT4)
Currency pairs: Works for any pair
Time frames: Works for any time frame
Trade Style: Works for scalping, day trading and swing trading
Input Parameters: Variable (inputs tab), color settings & style
Indicator type: Momentum
Does the indicator repaint? No.
Momentum Reversal + 1-2-3 Reversal Points Forex Day Trading Strategy
This day-trading strategy combines the Momentum Reversal Forex Indicator MT4 and the 1-2-3 Reversal Points Pattern Indicator MT4 to catch high-probability intraday reversal moves.
The first indicator is a histogram that crosses above zero for a buy signal, and below zero for a sell signal.
The second indicator marks reversal structure with arrows (blue for bullish, red for bearish).
Trading on lower time-frames (such as 5-minute or 15-minute charts) for major FX pairs, this strategy is designed for traders who prefer identified reversal points rather than riding long trends.
It works best in liquid sessions (London, New York) and is suitable for intermediate day traders comfortable with quick decision-making and strict risk control.
Buy Entry Rules
- The Momentum Reversal histogram must cross above zero and stay above for at least one completed bar.
- The 1-2-3 Reversal Points Indicator must generate a blue arrow, indicating a bullish reversal pattern has formed.
- Confirm price is not deeply extended: ideally, price retraced to a recent support or session low before the signal.
- Enter a buy once both conditions align, and the next candle closes above the reversal high point identified by the blue arrow.
- Stop loss: place below the recent swing low (or the low of the reversal arrow bar) by 8-15 pips, depending on the pair and volatility.
- Take profit: aim for 12-25 pips, or a 1:1.5 or 1:2 risk-reward ratio.
- Alternatively, exit when the histogram approaches a strong overbought region or shows signs of crossing back below zero.
Sell Entry Rules
- The Momentum Reversal histogram must cross below zero and remain below for at least one completed bar.
- The 1-2-3 Reversal Points Indicator must generate a red arrow, marking a bearish reversal structure.
- Confirm price is near recent resistance or session high before the signal, limiting risk on entry.
- Enter a sell once both conditions align and the next candle closes below the reversal low point indicated by the red arrow.
- Stop loss: place above the recent swing high (or the high of the red arrow bar) by 8-15 pips, depending on volatility and pair.
- Take profit: target 12-25 pips or a risk-reward of 1:1.5 to 1:2.
- Exit early if the histogram nears zero or begins to cross back above (for shorts) / below (for longs).
Advantages
- Clear signal alignment between momentum and pattern reversal increases the probability of success.
- Works well for intraday scalpers and day traders seeking defined exit targets and shorter holding times.
- Applies to multiple currency pairs and under 15-minute timeframes, offering frequent setups.
- Combines a structural reversal pattern (1-2-3) and a momentum shift, reducing choppy or false entries.
Drawbacks
- Reversal setups tend to be fewer than trend-following ones, so patience is required.
- In range-bound or low-volatility periods, signals may trigger, but the price may lack follow-through.
- Requires quick decision-making and tight risk control, as momentum can fade fast.
- Not always suitable around major news events where reversals may be sudden and erratic.
Example Case Study 1 – EUR/JPY (15-min Chart)
During the London session, EUR/JPY pulled back into a recent support zone near 141.45.
The Momentum Reversal histogram crossed above zero and stayed positive for one full bar.
Shortly afterward, the 1-2-3 Reversal Points Indicator plotted a blue arrow, marking the low of the 1-2-3 pattern at 141.43.
A buy was entered at 141.50, stop loss placed at 141.35 (15 pips risk), and take profit set at 141.80 (30 pips target: 1:2 reward).
The move reached the target within 40 minutes, giving +30 pips.
Example Case Study 2 – AUD/USD (5-min Chart)
In the New York afternoon session, AUD/USD rose into resistance around 0.6705, and then the histogram of Momentum Reversal crossed below zero.
The 1-2-3 Reversal Points Indicator gave a red arrow at 0.6707.
A short trade was triggered at 0.6700, stop loss set at 0.6715 (15 pips), and take profit at 0.6685 (target 15 pips for 1:1 risk-reward).
The move ran for ~20 minutes and closed at 0.6683, netting +17 pips.
Strategy Tips
- Use major currency pairs with good liquidity (EUR/USD, GBP/USD, USD/JPY, AUD/USD, EUR/JPY) to ensure tighter spreads and reliable momentum.
- Avoid trading during major economic news release times when whipsaws are common; wait for the market to settle and momentum signals to form.
- Confirm that the reversal arrow (1-2-3 pattern) aligns with a structural point, such as recent support/resistance or intra-day high/low, to increase edge.
- Adjust your lot size so that the risk of stop loss (8-15 pips) remains within your risk management rules (e.g., 1-2% of account per trade).
- If the Momentum Reversal histogram crosses above zero but no reversal arrow is generated, skip the trade — you need both tools to align for higher probability.
- Track how many trades you take and the win/loss ratio. Day-trading reversals can give fewer trades but better defined risk-reward. Consistency is key.
By combining the momentum-based signal of the Momentum Reversal Indicator MT4 with the structural reversal pattern recognition of the 1-2-3 Reversal Points Pattern Indicator MT4, you gain a disciplined day-trading strategy that identifies turning points, limits exposure, and targets clean profit opportunities.
Use it with discipline, good risk control, and patience for optimal results.
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Download the “momentum-reversal-detector.mq4” indicator for Metatrader 4
