Hammer and Engulfing patterns trend
trading is a strategy trend-momentum with candlestick pattern
filtered. This forex system uses candlestick patterns as Hammer and
Engulfing to make trading decisions. The filters applied at this
system are:
two EMA lines and RSI oscillator.
Time Frame 60 min or higher.
Forex Indicators
RSI oscillator, 14 period,close.
EMA 21, period, close.
EMA 8 period, close.
Currency pairs:any.
Long entry:
Check if there is , a candlestick
pattern :“ Hammer” or “Bearish Engulfing”.
Hammer pattern is a candle of
any color - consists of a small body near the high with a little or
no upper shadow and a long lower tail – more than 50% of the
candle’s length.
Bullish Engulfing pattern
consist of two candles. First candle is red and the following one is
green with its body fully covering body of the first candle.
RSI oscillator below 50.
5 EMA line crosses upward slow 13 EMA . If there was no reverse pattern (“Reverted Hammer” or “Bearish
Engulfing”) by the time when EMA lines crossed, then a long
position is opened with a stop loss at 50 points and a trailing stop
is set at 50 pips when the position becomes profitable; else the
strategy is reset. A long position is closed by a stop loss or
trailing stop or when a SELL signal is generated.
Short entry
Check if there is , a candlestick
pattern: “Inverted Hammer” or “Bearish Engulfing”.
Inverted Hammer pattern is a
candle of any color that looks like a upsidedown hammer - consists of
a small body near the low with a little or no lower shadow and a long
higher tail – more than 50% of the candle’s length.
Bearish Engulfing pattern
consist of two candles. First candle is green and the following one
is red with its body fully covering body of the first candle.
RSI oscillator above 50 level.
5 EMA line
crosses downward slow 13 EMA. If there was no reverse pattern
(“Hammer” or “Bullish Engulfing”) by the time when EMA lines
crossed, then a short position is opened with a stop loss at 50
points and a trailing stop is set at 50 pips when the position
becomes profitable; else the strategy is reset. A short position is
closed by a stop loss or trailing stop or when a SELL signal is
generated.
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