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MOVING MARKET (BULLISH or BEARISH)
Forex market is trending (going up or down) about 40% of the time. When market is moving there is a nice potential to capture a lot of pips providing that we are on the right side of it. So what would be the best entry point? How do we know that market is moving and there is still room for more move?
These are the questions to which we will never have a 100% accurate answer, however, by doing technical analysis properly we should be right about the trade about 80% of the time.
I used to have a solution where I looked at 3 time frames to make my decision, however I changed my strategy to a simpler one that produces great results without having to look at other time frames.
If this strategy is used on the 5 min chart it is be an excellent solution for these that like scalping.
If this strategy is used on the 15 min time frame, it can suit the swing trader.
For anyone who is looking for a position or longer term trades, please consider the 1 hour or 4 hour chart for this system.
Here are the indicators that are needed for this setup:
1. Moving Averages
Exponential Moving Average: 5 (red color)
Exponential Moving Average: 20 (pink color)
Exponential Moving Average: 40 (purple color)
Exponential Moving Average: 100 (dark blue color)
2. MACD with the following settings (20,50,6)
3. Stochastics (9,3,3)
4. Support and resitance indicator (the purple and yellow dots, or lines will have to be drawn manually each time a top or bottom is established)
5. Pivot Point indicator (or lines can be drawn according to the calculations provided in the Pivot Point lesson)
Condition to enter a buy trade:
Moving Average lines have to be trending up
MACD has to be above the zero line.
Stoch lines have to be in the 20 or 50 zone and starting to "go up"
We will also watch for bullish hammers, RR, doji or cycle low forming at the moving averages lines
Condition to enter a sell trade:
Moving Average lines have to be trending down
MACD has to be below the zero line
Stoch lines have to be in the 50 or 80 zone and starting to "go down"
We will also watch for bearish hammers, RR, doji or cycle high forming at the moving averages lines
Target & Stop:
We will need to pay a lot of attention to the Pivot Point indicator or our "doubles" zone, as these areas are likely to stop the price for some range trading or we may see reversal.
Stop, We will be using our last cycle low/high and we will have our stops in few pips below/above these areas.
Sometimes price will be dancing between our pivot points so we will need to consider these lines as our support & resistance.
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