Qualitative Quantitative Estimation (QQE) Indicator Guideline
QQE indicator is an MT4 technical tool that resembles the relative strength index. Yet, it is built on complex smoothing equations. In effect, as a multi-timeframe instrument, the MT5 qqe indicator can offer powerful signals in all financial markets like forex, CFD markets, and Crypto markets. However, traders tend to use it in different forms to catch trading opportunities. Hence, we can use the qqe indicator for Tradingview to detect market tendencies, divergence, or even to identify overbought and oversold conditions.
What is QQE indicator?
QQE or Quantitative Qualitative Estimation known as the qqe indicator is a technical trend detector tool. In fact, it is based mainly on a smoothed relative strength index. Also, it considers two different trailing levels (fast and slow). Practically, the qqe indicator works the same as the RSI indicator. Better still, it represents a leading analytical indicator that rarely generates false signals.
Actually, besides being used to discover the market tendency. There are multiple forms in which the qqe indicator can be used to produce trading signals. The most common techniques are crossovers, overbought/oversold conditions, and divergences.
We already mentioned that the Tradingview qqe indicator consists of an RSI improved by a smoothed technique and two volatility-based trailing levels. Thus, in order to calculate this indicator, we should pass through some steps.
We obtain the fast and the slow trailing levels by calculating, over n-periods, the average true range of the smoothed RSI. Then, using the additional n-periods smoothing technique of “Welles Wilder” to further smooth the ATR.
Finally, we multiply this smoothed ATR of RSI by the fast ATR multiplier to get the fast trailing level. Similarly, we calculate the slow trailing level by multiplying the smoothed ATR of the RSI by the slow ATR multiplier.
What is QQE histogram?
The QQE histogram is an advanced version of the basic QQE indicator for MetaTrader. In fact, the basic version reveals only values of the QQE tool in order to determine overbought and oversold conditions. However, the custom version of the indicator comes with a histogram plotting that adds more momentum status to this trend-following tool.
How do you use the QQE indicator?
Trading the QQE tool is relatively easy to use and understand. Because there are few buy and sell rules to follow. Basically, the QQE indicator is a leading oscillator that generates entry signals. In fact, there are two different signals that occur when the two lines of the indicator cross each other or when the blue line crosses certain levels.
Beginning with the first signal that considers the two lines of the oscillator. When the blue line strikes the yellow line from below, it is a long signal. And when the blue line crosses the yellow line from above, it is a short signal.
Traders may go long when the ascending blue line of the QQE forex oscillator crosses above the other yellow line of the indicator. Here, The value of the qqe indicator should be below 30 as a first step. This highlights that the price may be oversold.
Contrariwise, forex traders can go short when the descending blue line of the QQE oscillator crosses below the other yellow line of the Quantitative Qualitative Estimation indicator. Here, The value of the qqe indicator should be above 70 in the first stage. This highlights that the price may be overbought.
Moving to the second signal that considers the 50 level of the qqe indicator.
When the blue line crosses the 50 level from below, it is a long signal. And when the blue line crosses the 50 level from above, it is a short signal.
So, when the blue line of the forex indicator breaks above the 50 level, this can be perceived as a buy signal.
conversely, when the blue line of the qqe indicator breaks below the 50 level, this can be perceived as a sell signal.
How to trade with QQE Indicator ?
QQE Signals provides traders with significant trading indications. However, the MT4 qqe signals can be interpreted in multiple ways depending on the movement and the position of the 3 lines. Regardless, the RSI line represents the most important line in the indicator. So, as shown in the MetaTrader interface below, the MT5 qqe indicator oscillates between three major levels: 30, 50, and 70.
Consequently, when using this analytical tool, we can conclude different readings of QQE Signals. For this reason, traders try to spot clues that suit their trading style based on those signals.
Trend detection trading
The qqe indicator is mainly used to identify tendencies. Thereby, depending on the movement of the smoothed RSI line, we can predict the future trend. To clarify, if the indicator is moving above the 50 level (which represents the neutral line of the indicator), it means that we are at an ascending period, a bullish market. Consequently, we should look for a long position.
Accordingly, we can use the MT4 qqe signals as indications to filter trades. So, to open “buy orders” when the indicator is above the 50-value level. Alternatively, open “sell orders” when the indicator shows lower values ( below the 50-value).
As a technical indicator that consists of three lines, spotting crossovers often provides traders with significant signals. In effect, the MT4 qqe indicator delivers alerts through two kinds of crossovers:
Between the RSI and the trailing lines trading
In simple terms, when the RSI crosses above the fast and the slow trailing lines, it signals a rising market that should reflect a long setup (buy order). Contrarily, when the RSI line moves below the trailing levels, the qqe indicator for MT4 signals a falling trend, then, we should be ready for short positions.
Between the fast and the slow trailing lines trading
In this part, we will focus on the movement of the fast and slow trailing lines (TL) of the MT5 indicator. To explain, if the fast TL surpasses the slow TL, then, we will consider a buy signal. Otherwise, it will signal a downtrend tendency, in which we should go for sell orders.
Overbought/Oversold conditions trading
Indeed, we can use the Tradingview qqe indicator to determine when the price is in overbought and oversold zones. Actually, similar to the RSI indicator, we can define overbought conditions when the indicator is higher than or equal to the 70% level. whereas, we mark an oversold condition when the indicator is equal to or less than 30%. Nevertheless, we can consider these signals when any of the qqe outputs cross their level. Hence, if the RSI or the trailing lines moves above the 30, a buy signal is given. Alternatively, if any of the lines cross above the 70 a sell signal is given.
When using the MT4 qqe indicator, most traders look for divergence between the indicator and the price action. So that they can determine probable reversal moves. However, there are two forms of qqe divergence setups:
- QQE hidden divergence: this type of qqe divergence indicates tendency continuation. So, we will spot a hidden bullish divergence when the price action forms higher lows, while the qqe indicator creates lower lows. On the other hand, we will consider a hidden bearish divergence when the price is setting lower highs, but the qqe indicator forms higher highs.
- QQE regular divergence: this type of qqe divergence signals trend reversals. Therefore, a regular bullish divergence occurs when the market price sets new lows and the indicator forms higher lows. Whilst, a regular bearish divergence happens when the market makes new highs while the indicator forms lower ones.
Download QQE indicator for MT4
QQE indicator for MT4 represents a smoother version of the famous RSI indicator combined with two volatility trailing levels. In fact, this MT4 indicator allows traders to catch basic trading signals. Thereby, they will go long when the main line of the indicator (colored in “deep sky blue”) breaks above the neutral line at 50. Otherwise, go short if the MT4 qqe indicator (colored in “light orange”) dips below the neutral line at 50.
Download QQE indicator for MT5
QQE indicator for MT5 is a technical instrument that traders mostly use to discover the general tendency of the market. Also, we can use it to determine when to exit trades. So, during a bullish movement, traders tend to close long positions when the MT5 indicator falls below the 50-average. On the other way, seeing that the MT5 qqe indicator surpasses the 50-average during a bearish movement, means that we should close all sell orders. Regardless, using crossover between the different lines of the indicator is still one of the most popular techniques.
Download QQE indicator for Tradingview
QQE indicator for Tradingview represents a multi-signal tool for traders. In fact, besides providing indications about the upcoming price directions through the crossovers. It also helps in identifying conditions in any financial market. Moreover, traders rely on the Tradingview qqe indicator divergences to spot powerful reversal points.
In brief, the MT4 QQE indicator represents an oscillator of three lines that is founded on a complex mathematical calculation. The main advantage of this MT5 indicator is its neutral line at level-50, which defines a reference for price movements. Nevertheless, traders use this Tradingview indicator by relying on the crossovers between its different lines as well as identifying divergences. In addition, this technical indicator helps in determining overbought and oversold conditions.