Forex

SHI Channel indicator

Hi there!

Our indicator today is not one of the popular indicators yet, but it’s growing popularity among the Forex traders in their forum; the SHI Channel indicator.

Channel trading in general is one of less use trading method, however it has its fan who trading the two methods of channels: Channel direction follower and Channel breakout.

The MetaTrader version of the SHI Channel indicator (SHI_Channel_true.zip) was created by Shurka & Kevin

How does the SHI Channel indicator work?

The SHI Channel indicator and as the all of the channel indicator uses the highest high and lowest low of the price to determine the upper and lower bands of the channel.

In the SHI Channel The channel is calculated according to the given period of calculation and the time frame of the used chart, and the channel is self-adjusted (Like the Bollinger Bands).

As you see in figure 1 there are two thick lines that indicates the upper and lower channel and a dashed center line.

The channel gives the overall direction of the price movement - up or down - and may change from time to time, specially if it used with a low timeframe (1, 5 and 5 minutes).

How to trade using the SHI Channel indicator?

Actually you can’t trade with the SHI Channel indicator alone, it will not tell you when to enter the trade neither when to exit, The SHI Channel indicator telling you the overall direction of the price trend and the channels with the middle line warn you how much the trend is strong or weak, however , you have to use another indicators to generate the entry/exit signals.

Some of SHI Channel indicator users recommend to use it with this set of indicators:

Juice indicator
LerGuerre indicator
I_Trend indicator
Perkyasctrend1

When the above four indicators give you the entry signal, it must to be in the same direction of the SHI Channel; if the signal was sell and the SHI Channel is sloping down we sell (Figure 2), conversely, if the signal of the three indicators was buy and the SHI Channel is sloping up we buy.