The MACD 5 bars histogram is an
excellent swing trading strategy for beginners. The beauty of this
strategy is that it does not require you to monitor the market for a
long time. It also signals you well in advance as to when the entry
of a trade is about to take place.
When prices rise, the histogram bar
becomes longer as the speed of theprice movement accelerates; the bar
contracts as price movement decelerates. The same principle applies
when prices are falling, but the histogram bars form at the bottom.
Time Frame: H1 and H4;
Currency pairs:majors.
The MACD histogram indicates the
direction and momentum of the market. When the MACD histogram
switches from negative to positive, this indicates a possible upward
shift in momentum. We wait for fi ve positive bars on the histogram
to confirm the momentum before entering a long
trade on the fi fth bar. No prizes for
guessing why the name of this strategy is called the fi fth element!
When the MACD histogram switches from
positive to negative, this indicates a possible downward shift in
momentum. We wait for fi ve negative bars of the histogram to confi
rm the momentum before entering a short trade on the fifth bar.
Buy
Wait for the MACD histogram to go from
negative (<0) to positive (>0).
Wait for four positive bars to form on
the histogram before going long
on the opening candle of the fifth
histogram.
Set the stop loss at the last low
histogram.
The trade will have two profit targets
with risk to reward ratios of 1:1
and 1:2 respectively.
Sell
Wait for the MACD histogram to go from
positive (<0) to negative (>0).
Wait for four negative bars of the
histogram before going short on the
opening candle of the fi fth histogram.
Set the stop loss at the previous high
swing.
The trade will have two profit targets
with risk to reward ratios of 1:1
and 1:2 respectively.![]() |
MACD 5 bars histogram buy example
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MACD 5 bars histogram sell example
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