How Do You Use Stochastic Momentum Index MT5 Indicator?
Stochastic Momentum Index Indicator Analysis Buy & Sell Signals
Created by William Blau.
The Stochastic Momentum Index, SMI technical indicator is an adaptation of the classic Stochastic Oscillator indicator that smoothes out the stochastic indicator oscillations.
How Do I Add MT5 Stochastic Momentum Index Indicator in Meta Trader 5 Charts
Construction of SMI Indicator
SMI technical indicator is calculated by comparing the price relative to the average of an n number of price periods.
Then instead of drawing these values directly, a smoothing using an Exponential Moving Average is then applied to the values and the values are then drawn to form the SMI indicator.
When the closing price is greater than the average of the price range, the SMI technical indicator will move up.
When the closing price is less than the average of the price range, the SMI technical indicator will move down.
SMI technical indicator oscillator ranges between values of +100 and -100, this SMI technical indicator is also less prone to forex whipsaw signals compared to the stochastic oscillator indicator.
How to Generate Buy and Sell Signals
Buy & Sell Signals
The Stochastic Momentum Index technical indicator can be used to generate buy and sell signals using the technical analysis method shown below - Buy signal is when the SMI technical indicator is heading upwards - Sell signal is when the SMI technical indicator is heading downwards.
Overbought and Oversold Levels Crossovers
- Overbought levels is SMI technical indicator values above +40
- Oversold levels is SMI technical indicator values below -40
Buy signal gets generated when SMI technical indicator oscillator falls below the oversold levels and then rises above these oversold levels and starts moving upwards.
Sell signal gets generated when SMI technical indicator oscillator rises above the overbought levels and then falls below these overbought levels and starts moving downwards.
Divergence FX
The SMI technical indicator example below shows a bearish classic divergence setup between the price and the SMI indicator. When the Stochastic Momentum Index technical indicator showed this divergence signal the price trend reversed and started moving in a downwards direction.
Bearish Divergence Stochastic Momentum Index Indicator
How to Add MT5 Stochastic Momentum Index Indicator in Meta Trader 5 Charts
Step 1: Open MT5 Navigator Panel
Open MT5 Navigator panel as illustrated below: Go to 'View' menu (click), then select 'Navigator' panel (click), or From Standard Tool Bar click 'Navigator' button or press keyboard MetaTrader 5 short-cut keys 'Ctrl+N'
On MetaTrader 5 Navigator window, select "Indicators", by DoubleClick
How Do You Use MetaTrader 5 SMI Indicator?
How to Add Stochastic Momentum Index MT5 Indicator
Expand the menu by clicking the expand button (+) or double click the 'indicators' menu, after this the button will appear as (-) & will now show a list of MT5 technical indicators as shown below - choose the Stochastic Momentum Index indicator from this list of MT5 technical indicators so that you can add the Stochastic Momentum Index MT5 indicator in the MT5 chart.
How Do I Use MT5 Stochastic Momentum Index Indicator?
How Install and Add Custom Stochastic Momentum Index Indicator on MetaTrader 5?
If the MT5 indicator that you want to add on the MT5 charts is a custom MT5 indicator - for example if the Stochastic Momentum Index technical indicator that you want to add is a custom MT5 indicator you will need to first add this custom Stochastic Momentum Index MT5 indicator in the MT5 platform and then compile this custom Stochastic Momentum Index indicator so that this newly added Stochastic Momentum Index MT5 custom indicator appears on the custom indicators list in the MetaTrader 5.
To learn how to add Stochastic Momentum Index indicators in MetaTrader 5 - how do you add Stochastic Momentum Index indicator window to MT5 platform? - how do you add Stochastic Momentum Index custom indicator on MT5? - How to add a custom Stochastic Momentum Index custom indicator on MetaTrader 5.
How Do You Use MetaTrader 5 Stochastic Momentum Index Indicator?
