Center of Gravity is the channel indicator that appears on the chart of the currency pair channel, consisting of 5 lines:
- Blue line – middle line of the channel
- Green line – internal borders of the channel
- Yellow lines – external borders of the channel
The distance between the internal and external borders are in direct dependence on the level of volatility. The higher the volatility is, the shorter the interval between boundaries.
Characteristics of Center of Gravity indicator
- Platform: Metatrader4
- Currency pairs: All pairs
- Trading Time: Around the clock
- Timeframe: Any, recommended H1 and higher
Center of Gravity indicator is used in channel forex strategies and involves the use of two types of entry points:
1. Rebound from the border of the channel
Prices rebound from the lower border of the channel open a buy position, the first take profit set in the middle line of the channel, the second Take Profit – at the top border of the channel. Stop Loss is placed below of the channel, at a distance corresponding to the spacing between the green and yellow lines:
2. Price crosses the center line of the channel
Signal for opening a long position is the price crossing the midline of the channel from the bottom up, to open a short position - from top to bottom. Take Profit and Stop Loss set at a level of internal boundaries of the channel.
Center of Gravity indicator has the disadvantage of repainting of the channel, which is especially pronounced at the younger Time Frames.
