Relative Price Channel Indicator MT5 is a custom Indicator designed for the MT5 trading platform that is based on the RSI oscillator.
However, compared to other oscillators or even the RSI for that matter, the Relative Price Channel Indicator plots a modified version of the RSI.
As seen in the images below, the Relative Price Channel Indicator also has potential buy and sell areas that are plotted on the chart which also indicates the movement of the trend in price.
Relative Price Channel Indicator: When Should You Long?
When to go long using the Relative Price Channel Indicator?
Look for the Relative Price Channel Indicator to be rising in an uptrend.
You can see this based on the slope of the Indicator as seen in the above example.
Wait for the RSI to fall to the lower buy area and wait for it to move back above it.
Go long on the open of the next candlestick.
When to exit your long positions?
Exit the long position when you see the RSI moving into the green or the selling area which suggests that the upside momentum is decreasing.
Relative Price Channel Indicator: When Should You Short??
When to go short using the Relative Price Channel Indicator?
Wait for the RSI in the Relative Price Channel Indicator to move into the green zone which is the selling area.
We also need to see evidence of a slope to the downside. Following this, wait for the RSI to move out from the selling area and then go short on the open of the next candlestick.
When to exit your short positions?
Exit the short position when you see that the RSI is moving back into the buy zone.
Alternately, if you see the channel starting to slope higher then close the trade.
Where to set the stop loss?
Your stop loss should be set at the recent pivot low that forms prior to you taking up the long or short position.
Conclusion
The Relative Price Channel Indicator basically displays the RSI Indicator in a modified way by means of the price channel that forms.
This can be a good way to understand how the trends are shaping in the market.
Recommended Time Frames
Technically speaking, you can use this MT5 indicator for all time frames.
However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly.
We recommend that you use higher time frames like the H4 or even higher for better consistency.
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