Placing Channels on Charts on the MetaTrader 4 Software

The third option on the insert menu on the MetaTrader 4 software is the channels button key. The channels button is used to insert various types of channels on charts in MetaTrader 4 software. The channels button is displayed below.

Menu Button for Placing Various Channel Tools on the MetaTrader 4 Software

The channels that can be set on the charts are shown on the channels button key menu are:

1. XAUUSD Fibo Channels
2. Linear Regression Channels
3. Equidistant Channels
4. Standard Deviation Channels

All these channels have different technical analysis & are drawn differently on the MT4 charts.

XAUUSD Fib Channels

Fibo Channels is a type of channel that's automatically drawn by this Fibonacci Channels button, To draw these Fibo channels, a trader selects two points where to draw the same way a trend line is drawn on the MT4 platform, once this trend points are joined, the Fibo channels drawing tool uses these points to draw the first trend line & then automatically draws another 5 lines that form channels - these channels are used as profit taking levels to book profits once the price reaches these points.

Fibonacci areas used to draw these channels are: 0.618, 1.000, 1.618, 2.618, 4.236: The most commonly used channels are the first two channels as illustrated & shown below:

Placing Fibonacci Channels in MT4 Charts

Linear Regression Channels

Linear regression channels are self adjusting channels, which adjusts as the channel is plotted from point 1 to point 2, linear regression channels then form what is similar to a gold price boundary, this gold price boundary shows upper and lower gold price boundary & the center point which is the mean for the price.

These upper and lower channels are used to open trades & close trades and also determine the levels to take profits or set stops for trades. Linear regression channels are illustrated below:

Placing Linear Regression Lines on MT4

Equidistant Channels

The equidistant channels is the most commonly used channel in xauusd. On the MetaTrader 4 platform, a trader can draw an upwards channel or downward channel, the example shown below shows an upward channel, once the lower channel is drawn ( trend line), the top channel is automatically plotted, a trader can then doubleclick the upper channel to adjust it so that it touches the highest high of gold price as displayed below - the next time gold price touches this line the buy trade will then be closed and profit taken. As displayed below this was the best trading price to take profit when price in the up-ward trend touched the upper channel.

Placing Equidistant Channels on MT4

Standard Deviation Channels

Standard Deviation channel is similar to Linear Regression channel and it is also used to set the upper and lower boundaries within which gold price should move along within. The Standard Deviation channel is highligthed and shown below.

Placing Standard Deviation Channels on MT4