Trending Market Momentum

Trendig Market momentm is a forex strategy for intraday and swing trading.
Time frame 5 minute or higher.

Indicators for build template
Bollinger Bands (20, 2),
CCI 850 period),
Stocastic (14,3,3)
RSI (14, period).

Firstly we need to identify trending market. Lets talk about bullish trending market. We are seeking for such trending conditions:
Bollinger bands: both lower and upper bands are going towards trend dirrection or at least they are not widening extremely (we need to avoid jumping into gap).
CCI: this indicator stays somewhere between levels 50 and 150 for good trend and between 0 and 100 for lower trend. Extremes, such as level of 300, might be followed by price consolidation and trend ending, so we need to wait through at least 10 candles or enter a trade with a risk of a small loss.
RSI: this signal stays over 50 line.

Trading Rules
Open buy:
(1) EMA5 crosses EMA10 from below to upper direction, (2) RSI comes close to 50 line and then goes up or crosses 50 line from above and than crosses back to upper direction and (3) Stochastic direction is up (if Stochastic is at low level – very good, but often it will be around level of 80, as price is trending up) and CCI comes close to level of 0 and goes back upwards.
Important: sometimes EMA5 doesn‘t cross EMA10, just comes close and continue accelerating up.
Thats trend continuation follow – other indicator‘s signals.

Close buy:
(1) EMA5 crosses EMA10 from above to lower direction or (2) RSI crosses 50 line from above
to lower direction or (3) Stochastic crosses level of 80 from above to lower direction.
Important note: in strong trend* conditions, close signals (1) and (3) might fail and the trend will
continue. Re-enter trade when Stochastic reverses from lower to upper direction and EMA5
crosses EMA10 to the upper direction to maximise your profits.

Open sell:
(1) EMA5 crosses EMA10 from above to lover direction, (2) RSI comes close to 50 line and then goes down or crosses 50 line from below and than crosses back to lower direction and (3) Stochastic direction is down (if Stochastic is at high level – very good, but often it will be around level of 20, as price is trending down) and CCI comes close to level of 0 and goes back downward.
Important: sometimes EMA5 doesn‘t cross EMA10, just comes close and continue accelerating down. Thats trend continuation – follow other indicator‘s signals.

Close sell:
(1) EMA5 crosses EMA10 from below to upper direction or (2) RSI crosses 50 line from below
to upper direction or (3) Stochastic crosses level of 20 from below to upper direction.
Important note: in strong trend* conditions, close signals (1) and (3) might fail and the trend will
continue. Re-enter trade when Stochastic reverses from upper to lower direction and EMA5
crosses EMA10 to the upper direction to maximise your profits.

Examples
This example is USD/JPY pair, M5 timeframe.
We can see that we miss strong short-term downtrend as the market was flat and we have no re-enter signals here so entering somewhere in the middle would be to riski, as trend can end any time.
So we have one trade: market becomes volatile, indicated by Bollinger bands, and all indicators indicate normal moderate swing trade so we enter buy trade. Exit is indicated by Stochastic. After that price consolidation follows, indicated by Bollinger bands, so we do not trade then.
Trending Market Momentum











First trade is indicated by all indicators according to trending market rules. First stop is indicated by RSI. We stoped that out with small loss of about 1 pip, and after that we can re-enter trade, as all indicators confirms trend continuation. Exit is indicated by Stochastic. After that narrowing Bollinger bands indicate slowing market, so we do not trade.
Second trade: market becomes volatile again, indicated by Bollinger bands, so we enter the trade according to moderate swing trade rules: RSI crosses 50 line upwards, Stochastic going upwards, EMA5 crossed EMA10 upwards and CCI is about to cross 0 line upwards. This trade is the lucky one – we catched strong uptrend. Exit is indicated by Stochastic.
Trending Market Momentum











First trade: after Bollinger bands confirm that the market became volatile, we apply „seeking for extremes“ rule as all signals confirm that. Exit is indicated by RSI.
Second trade: trend continuation. While signals confirm entering buy trend for trend catching, CCI indicates risk of price consolidation and the end of the trade. So we enter this trade with a risk of a small loss. Exit is indicated by Stochastic.
Trending Market Momentum

Related

Momentum Forex Strategies 4534141214842924835

Post a Comment

emo-but-icon

item