It is the IMI (Intraday Momentum Index) indicator that is available for MetaTrader is a trading instrument for trend analysis. It is constructed using information taken from Relative Strength Index (RSI) and the price at which a candlestick is opened or closed candles within a specific time frame.
The indicator is an oscillator, which oscillates between two extremes in price (overbought as well as oversold areas). The IMI indicator is essentially a tool that helps to recognize the points at which the value of an asset is likely to be able to reverse.
The indicator categorizes the level 70 as an overbought zone, while level 30 is the zone of oversold. The price is likely to reverse once it reaches towards one of the extremes (level 70 or 30)
The IMI indicator can be utilized in a market with a trend to limit false signals. Additionally, it is advised to use it together with price action and other indicators of technical nature for trade entry.
Additionally this indicator is suitable for both novice as well as experienced traders. In addition, it is suggested for scalping and intraday trading.
How To Trade With The IMI Indicator
The image above shows what the indicator will look like on your chart following installation. It also shows how you can determine a high-risk trading setup.
Buy Signal: Firstly, ensure that the market is trending towards the upwards. The next step is to wait until the line of your indicator of sight to cross the oversold mark. It is then possible to begin a BUY/LONG trading position when price action has formed an inverse candlestick pattern that is bullish (e.g. bullish engulfing).
Sell Signal First, make sure that it is moving towards the downwards. The next step is to watch to see the indicator’s lines to reach the overbought mark. Then, you can start a short or sell position when price action creates the bearish reversal pattern on candlesticks (e.g. bearish closing).
Conclusion
It is believed that the IMI indicator that is used in MT4 is the most reliable indicator for trend reversal to identify the overbought or oversold levels within the markets. However, the indicator is not invincible to false signals since it is not to be considered the Holy Grail. It is therefore recommended to use in a market that is trending. In addition, the indicator is available for download at no cost.
