The Oracle Strength is a trend-following indicator that measures the strength by plotting multiple-colored bars. This guide will talk about how the indicator works and how you can apply it as a strategy.
What is the Oracle Strength Indicator?
The Oracle is a simple trend-following indicator that illustrates multiple bars below the chart. The bars have different colors, and each color signifies a different meaning. They represent market psychology.
The yellow-colored bars signify a constant battle between the buyers and sellers. It suggests buyers are trying to increase the price while the sellers are looking to decrease it.
The blue-colored bars show a lack of momentum. It mentions neither the bulls nor the bears are in control, and there is indecision between buyers and sellers.
The red-colored bars show a bearish momentum, while the blue-colored bars illustrate a bullish momentum. We can enter the trade whenever the Oracle Strength Indicator plots the blue and red bars.
Oracle Strength Strategy
Like most trend-following indicators, Oracle can tell you the potential entry and exit points. You have to locate the red and blue bars, and then you can enter the trade.
You may take a long position whenever the Oracle Strength draws the first blue bar. On the other hand, when the indicator plots the first red bar, you may go short.
Although trading with the indicator seems simple, you can still add other indicators along with the Oracle Strength for further signal confirmation.
The good thing is Oracle works on every timeframe. However, when you apply the indicator on longer timeframes, it produces fewer false signals. On the other hand, lower timeframes may give more false signals.
Buy Signal
- The Oracle Strength Indicator must plot a blue bar.
- You could enter the trade at the first bar, wait for the next blue bar to form, and then enter.
- You could place a stop-loss near the recent low.
- You could set take-profit at the recent high or exit the trade when any other color bar appears.
Sell Signal
- The Oracle Strength Indicator must plot a red bar.
- You could enter the trade at the first bar, wait for the next red bar to form, and then enter.
- You could place a stop-loss near the recent high.
- You could set take-profit at the recent low, or exit the trade when any other color bar appears.
Oracle Strength Pros & Cons
Like many other indicators, Oracle has its strengths and weaknesses. Let’s see the indicator’s pros and cons.
Pros
- Oracle Strength Indicator is super simple to use.
- It can present exact entry points.
- You can trade the indicator individually.
Cons
- Oracle Strength may not be suitable for short-term trading.
- Sometimes the indicator can plot wrong bars, even though there is a trend continuation.
- The indicator is lagging.
Conclusion
The Oracle Strength is a simple MT4 indicator of the trend’s direction. The bars of the indicator help navigate the trend more easily, and you can enter and exit positions accordingly. However, it is not the holy grail and you should always practice with any forex indicator on a demo account to begin with. The results can be highly dependant on good money management and trading discipline, along with the traders emotion.
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