Heiken Ashi Momentum

Heiken Ashi momentum is method of trading based on Heiken Ashi and momentum indicators.

Time frame 5 min or higher.

Currency pairs: majors and indicies.

From an idea of Russ Horn.

Indicators for trading and setup

Heiken Ashi (This indicator is present on all trading platforms)

Simple movign average 14 period..

OSMA oscillator (12, 26, 9).

Momentum oscillator 10 period set level at 100.

Relative Strengt Index (RSI 5 period).

Long Entry

1. A bullish Heiken Ashi candle (white) crosses above the 14 SMA.

2. The OsMA crosses above its Zero level.

3. The Momentum indicator crosses above the 100 level.

4. The RSI crosses above the 50 level.

5. As soon as all conditions mentioned above are met, we wait for the current candle to

close then place a buy order.

6. Set the Stop Loss a few pips below the last swing low point.

7. Set the Take Profit at double the amount of the Stop loss.

8. We can close our long trade without waiting for the Take profit to be hit when OsMA

crosses below the Zero level.

Buy trade Example

On the image above, we have a EUR/USD M5 chart, where a long trade was taken.

The vertical line (A) marks the exact signal candle.

Two candles before that signal candle, the price has moved above the 14 SMA forming

white bullish Heiken Ashi candles. The OsMA was following the price closely and has

been above the 0 level for the past two bars. The Momentum has just crossed above

the 100 level, while the RSI has been above the 50 level for a while.

As soon as all the rules were met and the current candle closed above the 14 SMA, a

long position was opened at 1.29479 (B).

Next, the Stop Loss was set just below the last swing low, at 1.29399, or exactly 8 pips

under the entry (C).

The Take Profit of 16 pips was also set, at 1.29639, which is exactly double the Stop

Loss (D).

As you can see, the Take Profit was hit 35 minutes later.

Short Entry

1. A bearish Heiken Ashi candle (red) crosses below the 14 SMA.

2. The OsMA moves below the Zero level.

3. The Momentum indicator crosses below the 100 level.

4. The RSI crosses under the 50 level.

5. As soon as all conditions mentioned above are met, wait for the current candle to

close and open a short trade.

6. Set the Stop Loss a few pips above the last swing high.

7. Set the Take Profit at double the amount of the Stop loss.

8. We can close our short trade without waiting for the Take profit to be hit when OsMA

goes above the Zero level.

Sell Example

The vertical line (A) shows the signal candle.

The first sign to start looking for a short entry was the candle before the formation of the

previous bearish red Heiken Ashi candle, followed by the close current candle below the

14 SMA. The OsMA has gone below the 0 level two candles ago. The Momentum

indicator crossed below the 100 level on the previous candle. The RSI has just crossed

under the 50 level.

After the close of the current signal candle, a sell order was placed at 1.04938 (B).

Immediately after that, a Stop Loss was set at 1.05216, which is 27.8 pips above the

entry and a few pips above the closest swing high (C). The Take Profit of 55.6 pips was

set at 1.04382 (D).

The price kept falling and the Take Profit was hit not long after.