Backfire, the two bar reversal MT4 indicator that catches the push blowing up
One candle runs hard in one direction. Then the very next candle runs just as hard the other way and gives almost all of it back. As a result, whoever joined that first candle is now trapped, and their exits feed the new move. Backfire is a two bar reversal MT4 indicator that finds that pair at a fresh extreme and fires on the close of the second candle.
The arrow does not repaint, does not move and does not disappear. It needs two closed candles, and once it prints it stays exactly where it printed.
Click the image to enlarge
Real chart, EURUSD on M30. The euro pushes to a fresh high with a strong green candle. Then a red one of the same size wipes it out and the sell arrow prints at 1.15479. Meanwhile the stop goes above the pair at 1.15565, a risk of only 9 pips. Over the next hours the euro fell to 1.14548, a move of 93 pips, more than ten times the risk. Every price comes from the exact candle history of that chart.
Why two candles say more than one
In price action trading a single big candle only tells you someone was in a hurry. In fact, the information arrives with the answer. If the next candle is just as big and closes back where the first one started, the push was an error, not a trend.
However, that pattern is worth nothing in the middle of a range, where price does it all day. Therefore Backfire only counts it when the two candles sit at the highest high, or the lowest low, of the recent candles.
What Backfire checks before it fires
- Two real candles. Both bodies must be bigger than a normal candle of that market.
- Opposite colours. One up, one down, in that order.
- The give back. The second candle must recover most of the first one, seventy percent by default.
- A fresh extreme. The pair has to sit at the edge of the recent range, not in the middle of it.
As a result, you get a handful of clean signals a day instead of a chart covered in arrows.
How to trade the two bar reversal MT4 signals
- Enter on the close of the second candle. At that point, the reversal is complete.
- Stop beyond the extreme of the pair. After all, if price returns there, the push was real.
- Take a first profit at the size of your risk. Then trail the rest while the move runs.
- Mind the news. Also, a pair of big candles around a release can be noise, so let the first minutes pass.
Markets and timeframes
| Gold XAUUSD | M1 for scalping, M5 and M15 for more room |
| EURUSD | M30, the example above |
| All major pairs | M5 to H1, the same rules |
This two bar reversal MT4 tool is one of the most active of the set, with several signals a day on gold M1 and a handful on the majors. In practice, the higher the timeframe, the fewer the arrows and the longer the moves.
What is inside
- Two bar reversals in both directions.
- Small dots on the first candle of the pair.
- Editable body power, recovery share and extreme look back.
- Arrows on closed candles only. They do not repaint, move or disappear.
- Popup, sound, push and email alerts, each one switchable.
- Premium dark chart theme, applied on attach and restored on remove.
Besides, it reads price only, so any broker and any account works. If you want robots that trade by themselves, browse our automated robots, and the rest of the manual set is in our chart tools for traders.
Questions about this two bar reversal MT4 indicator
Does it repaint? No. In fact, both candles are closed before the arrow prints, and it never moves afterwards.
How is it different from an engulfing pattern? However, an engulfing candle has to cover the body of the previous one. Here both candles are big and the second gives back what the first won, which is a different picture.
Can I get more signals? Yes. For example, lower the body power or the recovery share. Keep in mind that the defaults are the ones that kept the arrows clean.
Do you have the other version? Yes. This is the MetaTrader 4 build, and Backfire for MT5 finds the same pairs on MetaTrader 4.
Trading involves risk. Signals are information, not advice, so try any new tool on a demo account first and only trade money you can afford to lose.
