Forex trading with Volatility Market

We will identify volatile market for forex trading:

Bollinger bands: very wide or visibly wider compared to last flat period.

CCI: levels of this indicator are far from 0 line and changing consistently to any direction.

RSI: levels of this indicator are below 40 or above 60, changing direction. We avoid trading if it stays somewhere around level of 50, as it indicate price consolidation or flat market.

Scenario 1 – moderate swings

Open buy:

(1) EMA5 crosses EMA10 from below to upper direction, (2) RSI crosses 50 line from below to upper direction and (3) Stochastic direction is up or just changed direction to up.

Important: if Stochastic indicator meets buy conditions, one of (1) and (2) conditions are met and other are close to these conditions buy order also should be opened.

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.

Open sell:

(1) EMA5 crosses EMA10 from upper to lower direction, (2) RSI crosses 50 line from above to lower direction and (3) Stochastic direction is down or just changed direction to down.

Important: if Stochastic indicator meets buy conditions, one of (1) and (2) conditions are met and other are close to these conditions sell order also should be opened.

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.

Scenario 2 – seeking for extremes

Open buy:

(1) Price candles became far below both EMAs and current current candle touches EMA5, (2) RSI reached level of around 30 or less and is reversing upwards and (3) Stochastic is below 50 line and it‘s direction is up or just changed direction to up and (4) CCI reached level below -100 (optimal if below -200) and is reversing upwards.

Important: if Stochastic indicator meets buy conditions, one of (1) (2) and (4) conditions are met and other are close to these conditions buy order also should be opened.

Close buy:

(1) EMA5 crosses EMA10 from above to lower direction or (2) RSI crosses 50 line from above

to lower direction or reached level of about 50 and reverses downwards or (3) Stochastic crosses level of 80 from above to lower direction.

Open sell:

(1) Price candles became far above both EMAs and current current candle touches EMA5, (2) RSI reached level of around 70 or more and is reversing downwards and (3) Stochastic is above 50 line and it‘s direction is down or just changed direction to downwards and (4) CCI reached level above 100 (optimal if above 200) and is reversing downwards.

Important: if Stochastic indicator meets buy conditions, one of (1) (2) and (4) conditions are met and other are close to these conditions sell order also should be opened.

Close sell:

(1) EMA5 crosses EMA10 from bellow to upper direction or (2) RSI crosses 50 line from below

to upper direction or reached level of about 50 and reverses upwards or (3) Stochastic crosses level of 20 from below to upper direction.

Forex trading with Volatility Market

First trade we missed quite nice trade oppurtunite, because Bollinger Bands indicated flat market.

So we start with the first trade: this is moderate swing trade, CCI and Stochastic confirmed the trade, while RSI and EMAs were about to confirm the trade on past candle, so we enter at the next candle opening. Exit confirmed by stochastic.

Second trade: market became volatile, indicated by bollinger bands. In thi case we see CCI and RSI extreme. We enter trade on next candle after the signals are confirmed. Exit is indicated by RSI crossing 50 line upwards.

Third trade: Bollinger bands and CCI indicates trending market. CCI comes close to level of 0 and RSI crosses 50 line down and then crosses back upwards, while Stochastic and EMAs confirm the trade. Exit is indicated by Stochastic.

Fourth trade: all indicators indicate moderate swing trade, while Bollinger bands stays wide indicating volatile market, so we enter at the next candle. Exit is indicated by Stochastic.

Fifth trade: here we see either „seeking for extreme“ moderate swing trade situation. Seeking for extreme situation suggests entering the trade one candle earlier, although entering later would still be profitable. Exit is indicated by Stochastic.

Sixt trade: the trade is still running as I am writing explanation now. This is normal moderate swing trade, all indicator confirms that so we enter at the next candle after confirmation.

Between trades 2 and 3 there is quite confusing situation. All signals are likely to confirm buy trade, but: Bollinger bands indicates trending market. But in trending market for a possitive trade, we need CCI to stay around level of 100, not being in extremes few candles earlier. In this situation we see that CCI just recovered from extreme of over 320, so it is dangerous time to take early trade. Anyway, if by mistake we would have taken this trade, the loss would be minor, compared with all other profitable trades