The Rainbow Bars Forex Signal indicator for Metatrader 4 delivers accurate trend trading signals on the main MT4 chart.
The indicator pops up as a simplified trend-following rainbow and colored candlesticks.
The buy & sell trading method is simple to understand, even for absolute beginners.
Buy & Sell Trade Example
- Open a buy trade as soon as the price crosses above the blue colored line from below (bullish).
- Open a sell trade as soon as the price crosses below the blue colored line from above (bearish).
The Rainbow Bars Forex Signal indicator can be used for both trade entry and exit or as an additional trend confirmation filter.
For scalping, the indicator performs best during the London and New York trading sessions.
The indicator works equally well on all currency pairs (majors, minors and exotic) and shows promising results if used correctly.
Free Download
Download the “rainbow bars.mq4” indicator for MT4
Indicator Chart (EUR/USD H1)
The picture below shows the Rainbow Bars Forex Signal mt4 indicator in action on the trading chart.
Trading Tips:
Feel free to use your own favorite trade entry, stop loss and take profit method when trading with the Rainbow Bars Forex Signal 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: Trend
Does the indicator repaint? No.
Rainbow Bars + EW Trend MT4 Scalping Strategy
This scalping strategy combines the trend detection of the Rainbow Bars Forex Signal Indicator with the quick entry signals from the EW Trend Indicator for Scalping.
Rainbow Bars identifies trend direction when the price crosses the blue line—upwards for bullish and downwards for bearish.
The EW Trend Indicator signals short-term entries: crossing above 0.00 for buy, and below 0.00 for sell.
Using both ensures that trades follow the prevailing trend with confirmed entry points.
This strategy is most effective on 5-minute and 15-minute charts during active trading sessions, particularly in London and New York.
It works well on high-liquidity pairs like EUR/USD, GBP/JPY, and USD/CHF.
Buy Entry Rules
- Confirm that the price crosses above the Rainbow Bars blue line from below (bullish trend).
- Wait for the EW Trend Indicator to jump above the 0.00 level.
- Enter a buy trade at the close of the confirmation candle.
- Place a stop loss 10–15 pips below the recent swing low or below the blue line.
- Take profit 20–30 pips, or exit when the EW Trend crosses back below 0.00 or price closes below the blue line.
Sell Entry Rules
- Confirm that the price crosses below the Rainbow Bars’ blue line from above (bearish trend).
- Wait for the EW Trend Indicator to jump below the 0.00 level.
- Enter a sell trade at the close of the confirmation candle.
- Set a stop loss 10–15 pips above the recent swing high or above the blue line.
- Take profit 20–30 pips, or exit when the EW Trend crosses back above 0.00 or price closes above the blue line.
Advantages
- Combines trend-following with precise scalping entry signals.
- Works on multiple pairs with strong intraday moves.
- Suitable for short-term trading sessions, allowing quick profits.
- Helps avoid counter-trend trades by confirming trend direction first.
Drawbacks
- Rapid price movements can trigger early or false signals, especially on low timeframes.
- Whipsaw trades may occur when the price hovers around the blue line, causing quick reversals.
- Strategy performance may decline during low-volume periods or holidays.
- Requires discipline to avoid taking trades against the main trend indicated by the Rainbow Bars.
Example Case Study 1 – EUR/USD
On the 5-minute chart, price crossed above the Rainbow Bars blue line at 1.1052.
The EW Trend Indicator jumped above 0.00.
A buy trade was entered at 1.1055, stop loss at 1.1042, and take profit at 1.1075.
The trade reached the target within 25 minutes, yielding +20 pips.
Example Case Study 2 – GBP/JPY
During the New York session, the price crossed below the Rainbow Bars’ blue line at 191.60.
The EW Trend Indicator jumped below 0.00.
A sell trade was entered at 191.58, stop loss at 191.75, and take profit at 191.28.
The trade reached the target within 35 minutes, yielding +30 pips.
Strategy Tips
- Only trade when the trend and EW Trend confirmation fully align; avoid partial signals.
- Consider using additional support/resistance levels to strengthen entry and exit decisions.
- Focus on pairs with low spreads to maximize scalping profitability.
- Use trailing stops to capture extended moves while protecting capital.
- Avoid overtrading; limit to 2–4 high-probability trades per session.
- Check for market conditions—avoid trading during sideways consolidation or very thin liquidity periods.
- Backtest the strategy on different pairs to determine which respond best to trend and EW Trend signals.
- Keep a trading journal to track patterns, success rates, and adjust pip targets based on volatility.
