Scalping day - forex trading 4 hour chart

Scalping day ~ forex trading 4 hour chart

Scalping Day tools

The major support and resistance levels and patterns we will use on the 5M chart are:

A. The High and Low of the Previous Day.

B. Fibonacci Levels drawn from the High and Low of the Previous Day.

C. The 200ma. (Only on entry when no other levels are near)

D. The 75ma and the 21ema to gauge trend.

E. The Fast Run Up/Down price move and the large bar/spike bar move, which indicate a

possible trend change.

The priority of the levels from strongest to weakest are as follows:

Strongest Levels:

High Previous Day and Low Previous Day.

Fibonacci levels.

Weakest Level:

200ma (used only for starting a trade if no other levels are near)

Test of Support and test of resistance.

MA’s:

21ema is stronger than the 75ma.

Strongest Entry and Exit Patterns:

Large bar and Spike bar.

If Large bar or Spike bar is preceded with Fast Run Down or Fast run Up.

Weaker Entry and Exit Patterns:

Fast Run Down and Fast Run Up with no Large or Spike Bar.

As price nears these levels we note what price does at these levels. It may start a move with the

trend or move counter-trend. It may also do nothing. The 75ma/21ema are not levels. They are

guides to know if the market is trending and how much it is trending. This information can be used as when the market is in a trend, as the old saying goes, we do not fight it. Meaning we trade in the

direction of the trend. The 200ma is used only to initiate a trade if not other levels are near. It is also

used to note if the market is on the Bullish or Bearish side. If price is above the 200ma it is Bullish. If price is below the 200ma it is Bearish.

The charts below are examples of the 5M levels and patterns. Our trading runs from midnight to

noon Eastern Time.

Trending Day:

A. When the market is trending it is best to trade with the trend and wait to see if the trend

changes at a major S/R level. Many times the trend will continue past all levels. But note that a start

of a trend will usually start at one of the major S/R levels. The 21ema and the 75ma are used mainly

on these days for trade entry.

Non-Trending Days:

A. We use S/R levels to initiate a trade. The DT/DB pattern is used for confirmation

Range Days or times:

A. If price on the 5M makes two tops and two bottoms near each other the market has

moved into a range. Another way to look at it is a DT and a DB or vice versa. Enter

and exit quickly at the tops and bottoms of the range. Once a range has started d not

trade 10/21 crossovers. Trade only aggressive trades or stay out. Conservative trades

will not make any profit in a range.

Previous Days High and Low Levels: (Strongest S/R level)

A. Draw lines on the current days chart from the high and low of the previous day. The

previous day is from midnight to midnight. So if the current day is September 23 you

would draw the lines from midnight on the 22 nd to midnight on the 23 rd .

B. Price can be 15 pips or less on either side from the HPD/LPD and be valid if price

reverses, or passes the HPD/LPD. Best for Counter-trend moves.

Fibonacci Levels:

A. The extreme Fib levels are the strongest. They are the 38.2% and the 78.6% Fibs.

However price can hit any Fib level and reverse. Best for C/T moves.

B. Price can be 4 pips or less on either side of the Fibonacci Level. Best for 1 st entry only.

200ma:

A. The 200ma works effectively to initiate a trade when no other levels are near only. It is

also good to note if the market is bullish or bearish.

Double Tops/Bottoms:

A. These are common technical patterns that are used in trading. They can be seen all

over the chart. They are most important when used with a level or for a possible trend

change on a non-trending day. A double top is shaped like a ‘M’ and a double bottom

is shaped like a ‘W’. See the Introduction to Technical Analysis in the back of the

Introduction to Forex bonus ebook included for examples.

Fast Run UP/Down Patterns:

A. These patterns are seen most of the time a price makes a quick attempt to reach a

major level. Most of the time they indicate a possible trend change. We need to be

watching for these patterns as price nears a major S/R level.

More info for Scalping day ~ forex trading 4 hour chart:

Read More..

Trend Bouncer with Bollinger Bands - forex market times open

Trend Bouncer with Bollinger Bands ~ forex market times open

Trend bouncer forex strategy is a trend following system that use the Bollinger Bands, the purpose of this trading system is to find the retracement during a trend and get in to trade with the trend. In an uptrend, you will fi nd that, at a certain point in time, prices will pull back or retrace before continuing with the upward movement. Similarly for a downtrend, prices will retrace upward against the downward momentum before continuing their way down again. Experienced trend traders usually wait for the retracement to happen before taking a trade in the direction of the trend. This is how the trend bouncer strategy came about. The Bollinger Bands indicator provides an objective way of identifying the ebb-and-flow movement of a trend. Since this is a trend strategy, we have more than one profit target. In fact, we have two specific profit levels for this strategy. The strategy differs slightly from the trend rider in that there are specific levels for trend bouncer traders to exit with profits.

Time Frame H1 and H4

Currency pairs: Majors (example EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD,NZD/USD.

Indicators:

Bollinger Bands (moving average MA 12, deviation Dev2);

Bollinger Bands (moving average MA 12, deviation Dev4).

Trend line tool.

When the candlestick hits the upper band of Bollinger Bands (MA 12, Dev 2), it indicates an upward mmentum, and we prepare to go long. As prices retrace back to the MA 12

(the center line of the Bollinger Bands), a significant retracement has occurred, and it is a good time to enter for a long trade.

When the candlestick hits the lower band of the Bollinger Bands (MA 12, Dev 2), it indicates a downward momentum, and we prepare to go short. As prices retrace back to the MA12 (the center line of the Bollinger Bands), a significant retracement has occurred, and it is a good time to

enter for a short trade. This trend strategy exits at two different targets.

Buy

Find an up trend and draw trend line.

Wait for the price to hit the upper band of the first Bollinger Bands (MA 12, 2) and retrace back down to the center MA 12.

When the price touches MA 12, enter for a long.

When the trend line is broken to downward no longer buy.

The stop loss is the lower band of the second Bollinger Bands (MA 12, 4).

The trade will have three profit targets with risk to reward ratios of 1:1, 1:2.

Trend bouncer .with bollinger bands

Sell

Find an down trend and draw trend line.

Wait for the price to hit the lower band of the fi rst Bollinger Bands (MA 12, Dev 2) and retrace back up to the center MA 12.

When the price touches MA 12, go for a short.

The stop loss is the upper band of the second Bollinger Bands (MA 12 Dev 4).

When the trend line is broken to downward no longer sell.

The trade will have three profi t targets with risk to reward ratios of 1:1, 1:2.

Trend Bouncer with Bollinger Bands Quiz

Trend Bouncer with Bollinger Bands Quiz

More info for Trend Bouncer with Bollinger Bands ~ forex market times open:

Read More..

Two line MACD with EMAs and Fibonacci retracement - forex trading hours during christmas

Two line MACD with EMAs and Fibonacci retracement ~ forex trading hours during christmas

This is a trend-following system based on the use of several indicators; two EMAs (Exponential Moving Averages), and the MACD (Moving Average Convergence Divergence). I will

also be using the Fibonacci Retracement tool to help determine support and The EMAs are used as opposed to the SMAs (Simple Moving Average) because I feel it provides a faster reaction to the trend. There are three main representations of the MACD; the “One-lined” MACD, which has one line overlaying the histogram; the “Two-lined” MACD, which depicts two lines overlaying the histogram; and the OsMA (short for Oscillator of the Moving Average), which displays only the histogram. In this system, we will use the two lined MACD. On the 1-hour chart, this system requires the use of the two lines of the MACD to help determine the trend, but on 5-minute chart, it only uses the Histogram. We’ll add the 7 EMA, 13 EMA and MACD (we’ll use the default settings for MACD - 12, 26, 9). 7 EMA and 13 EMA Settings:

I. Period: 7 and 13

II. Shift: 0

III. MA Method: Exponential

IV. Apply to: Close.

Find your most recent swing points to draw your Fibonacci.

Trading rules Two line MACD with EMAs

Long Trades

1. The 7 EMA needs to be above the 13 EMA on the 1 hour chart.

2. MACD should be crossed over to the up side on the 1 hour chart.

3. Find your most recent swing points and draw your Fibonacci

retracement. Wait for price to retrace to at least the 38.2% retracement

level and no more than the 78.6% retracement level on the 1 hour chart.

4. Go to your 5 min chart for entry. Ensure at least one candle on the

M5 timeframe closes below the 38.2% Fibonacci retracement level. Wait

until the MACD Histogram forms a new bar above the zero line, then

enter the market with a buy trade at the close of that candle.

5. Stops and limits can be based on previous swing highs and lows on

the five minute or hourly charts. I personally use a 15 to 20 pip stop

based on my entry point. You have to decide this based on your own

risk/reward tolerance. Never risk more than what you see as your profit

potential.

Short Trades

1. The 7 EMA needs to be below the 13 EMA on the 1 hour chart.

2. MACD should be crossed to the down side on the 1 hour chart.

3. Find your most recent swing points and draw your Fibonacci

retracement. Wait for price to retrace to at least the 38.2% retracement

level and no more than the 78.6% retracement level on the 1 hour chart.

4. Go to your 5 min chart for entry. Ensure at least one candle on the

M5 timeframe closes above the 38.2% Fibonacci retracement level. Wait

until the MACD Histogram forms a new bar below the zero line, then

enter the market with a sell trade at the close of that candle.

5. Stops and limits can be based on previous swing highs and lows on

the five minute or hourly charts. I personally use a 15 to 20 pip stop

based on my entry point. You have to decide this based on your own

risk/reward tolerance. Never risk more than what you see as your profit

potential.

Fibonacci Retracement

After you have determined your trend as depicted by the EMAs and the MACD,

you want to look for your most recent swing points (swing-highs & swing-

lows). A swing-high is the highest point of the highest candle in a price

movement. A swing-low is the lowest point of the lowest candle or bar in a

price movement. In other words, a swing-high candle must be preceded by a

candle that has its high point lower AND the subsequent candle must also

have its high point lower. Conversely, the swing-low candle must be preceded

by a candle that has its low point higher AND the subsequent candle must also

have its low point higher. The Fibonacci tool is then used to determine a higher

probability retracement once the swing-low and swing-high are established. A

minimum retracement of 38% is required, as seen in the chart below:

A few candles earlier from the chart above, we see that the EMAs came into

bullish alignment, as well, however, once the Fib tool was applied to the chart,

we see that the market continued to retrace beyond the 78% level nullifying

the move as seen below:

However, as we patiently waited for market movement, we see that the bullish

trend reaffirmed (EMAs and MACD re-aligned) and subsequently retraced to

an appropriate level:

Entry

Once the requirements for determining the trend have been satisfied on the

1-hour chart, I drop down to the 5-minute chart to pin-point my entry. Only

the MACD Histogram is used at this time. When a histogram bar pops up from

below the zero line, this signals a bullish entry. A bearish entry is confirmed

when a histogram bar appears below the zero. Also, please take note, in my

videos, I often times refer to the “zero line” as the “water line”.

Remember, the 1-hour chart is used to determine the trend,

and only the 5-min chart is used for the actual entries.

Below is an example of a 5-min entry signal:

Short/Sell Trade Examples

EURUSD

The 1 Hour Chart

The 7 EMA is below the 13 EMA. The MACD is crossed down at point (A). All

points are marked on the chart. Find your most recent swing points to

measure your Fib retracement from. I have drawn my Fib Line using the most

recent swing points.

Price has retraced above 50% and

The 5 Min Chart

At point C the histogram has gone below the zero line. At point D enter short

at the close of that candle, because the histogram has gone below the zero

line. Point D marks the entry. Your limit can be the previous swing low on the

1 hour chart or a pivot point. Your stop can be a previous swing high on the 1

hour chart or a pivot point. You have to decide that based on your risk vs.

your reward. Price fell over 100 pips.

Buy/Long Trade Examples

GBPUSD

The 1 Hour chart

The 7 EMA is below the 13 EMA. The MACD is crossed down at point (A). All

points are marked on the chart. Find your most recent swing points to

measure your Fib retracement from. I have drawn my Fib Line using the most

recent swing points.

Price has retraced above 50%  

At point C the histogram is above the zero line. At point D enter long at the

close of that candle, because the histogram is above the zero line. The arrow

at point D marks the entry. Your limit can be the previous swing high on the

1 hour chart or a pivot point. You have to decide that based on risk vs. reward.

Price went up over 100 pips.  

More info for Two line MACD with EMAs and Fibonacci retracement ~ forex trading hours during christmas:

Read More..