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The Better Overbought oversold indicator is a simple MT4 indicator that looks identical to the RSI. It comprises a single moving average line, which signals overbought and oversold conditions
The RSI also oscillates between 0-100, meaning that it can reach an “overbought” level at 70 and an “oversold” level at 30. If our MA line oscillates between these levels, we get a signal to buy or sell a stock.
This indicator comes with the overbought and oversold bars, which tell you when levels are high or low.
The good thing about this indicator is that you can apply it to any timeframe. But when looking for signals, traders should be aware of the fact that false signals are more likely to occur on smaller timeframes.
BOO Indicator Signals
With an indication of overbought and oversold conditions, this indicator is useful for setting BUY and SELL signals.
When the market is overbought, it means that traders should be looking for an impending drop. This is because indicators such as the ADX will go above 70 which show that there’s a lot of volatility in the current market and traders should look to sell.
On the other hand, when the market goes down and the indicator is below 30, it’s a good time to enter long positions or exit short ones.
The indicator works best on every timeframe, but it is also a great tool to measure the market as a whole. For example, it’s useful to apply the tool on scales like the daily or weekly chart. This way it presents an overall picture of the market rather than focusing on one timeframe
There are some pros and cons of using a trading indicator, so make sure to avoid it on smaller timeframes.
Conclusion
The BOO indicator plots overbought/oversold levels to suggest when to buy and sell. Plus, it provides both the entry and exit points. It is absolutely free which makes it a great tool for any trader.
You can also combine this indicator with other indicators for better readings. For example, the Relative Strength Index (RSI) or the Moving Average Convergence/Divergence (MACD).
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