H4 price action strategy forex
Buy entry rules 1. The price has broken the slow MA upwards. MA 6 is at or above MA After the price touched the fast MA 25, go to the timeframe below and wait for the reversal signal It is important to note that subsequent MA touches are no longer taken into account; you need to open a deal only after the very first rollback.
The same is true for the first touch of one of the slow MA, or 25 MA. After receiving a signal on the H4 chart, we are waiting for confirmation on H1 and enter when the resistance level is broken. Stoploss is placed behind the local maximum. Usually, this is the high of the breakout candle. Take profit - 2 times more than stop loss. Sell entry rules 1. The price has broken down the slow MA MA 6 is at or below MA Does it continue its journey towards the North, or does it find its resistance nearby?
Let us find out from the next chart. The price finds its resistance and produces a bearish engulfing candle. The sellers have been waiting for this. It is time for the traders to flip over to the H1 chart and wait for an H1 bearish breakout to take a short entry.
Let us find out how the H1 chart looks. The H1 chart shows that the price produces an engulfing bearish candle and heads towards the South. The price on this chart makes a breakout at the red marked support level. It may make the traders wait for, or it may make a breakout straightway. Let us what the price does here. The price makes an explicit bearish breakout. The breakout candle looks very strong, barely having a lower shadow. A short entry may be triggered right after the candle closes by setting Stop Loss above the level where the H4 chart produces the bearish reversal candle.
Let us now find out how it ends. The price heads towards the South with good bearish momentum. It produces a bullish engulfing candle having a long upper shadow.
DIFFERENZA TRA FOREX E TRADING GALLERY
The Doji candle pattern is only one part of the overall Doji Sandwich trade setup. Followed by the Doji candle. Another large candle is of the same magnitude as the first candle. And, this is what makes the H4 forex trading strategy very effective. This will produce a high probability reversal setup. When you combine the Doji candle with the nearby candles we have a recipe for success. This simple trade setup on the 4h chart, will almost double your success rate.
Now, here is the thing: The truth about trading is that no matter what trading setup you use, there will always be false signals. See below: Filter Your Trading Setups with Stochastic Indicator The overbought and oversold conditions are based upon the stochastic indicator. See the chart: The Doji Sandwich pattern meets all of our requirements: The first candle and the third candle are more or less of the same length and point in the same direction bullish flag chart pattern.
Second, the middle candle is a Doji candle. Moving on… Spotting a chart pattern is only half of the equation; we also need an entry technique for our H4 trading strategy. See below: There are two ways to enter this trade: You can buy sell as soon as the 4th candle opens. Wait until the high low of the third candle is broken.
We have used both types of entry techniques to take advantage of high probability trades. See below: How to Manage Your Trade? The following moving averages are used by the H4 trading strategy: The moving average. The period simple moving average SMA.
Every major money manager in the world uses those moving averages to make informed decisions about their portfolios. Now… Here is how we use the moving average : The MA is only used for long-term guidance and to decide how long are we going to stay in the trade. However, if the pattern develops above the MA, we want to stay with the trend and ride that wave to squeeze as much profit as possible. What we look after is for the price to break above the 50 MA either within the first candles after we entered the market or during the development of the Doji Sandwich pattern.
See below: Stop Loss and Exit Strategy First, the protective stop-loss trading strategy is placed below the Doji candle, which is the middle candle of the 3-bar pattern used. More, once we break and close above the 50 moving average, the stop loss than can be trailed below the 50 MA to further reduce the risk.
Everything remains the same, only two things change. Here is one more hint: If the third candle closes above the high of the first candle then this is setting the stage for a very high probability trade. Try it for yourself and look on your charts for the Doji sandwich pattern.
Keep in mind that the H4 trading strategy requires a solid understanding of how the market operates. The trading rules outlined throughout this guide should be enough to help you navigate all types of trading environments. The H4 chart carries more weight in FX trading due to how each day is broken is trading sessions.
The Doji Sandwich is a 3-bar reversal pattern. You have learned an intuitive entry technique along with trade management tactics. The best H4 forex strategy will increase the odds of your success even further. Thank you for reading! For example; when price moves into the resistance area we could then be looking for a reversal candlestick to form to confirm that price is looking to reject the resistance and make a new move back lower.
Trading Aggressive Breakouts This is a riskier and more aggressive strategy, but it does come with higher rewards. When price makes a breakout on the 4 hour time frame they can often be explosive and lead to very large reward winning trades. However, breakouts can also often turn into fake outs so it is important you use small stop loss levels and aim for higher reward winning trades to cover any losses and to remain profitable.
The key to making 4 hour chart breakout trades is to find a major area of support or resistance that price has respected on multiple occasions. For example, see the chart below. Price had been respecting the obvious support level on multiple occasions. When price is looking to make a breakout lower and through this support level we could have a sell stop order ready to activate so we are entered into the trade automatically as price breaks lower.
Lastly on Using H4 Trading Strategies There are many different strategies you can use to make high probability and profitable trades on the 4 hour charts. The 4 hour charts are the perfect chart for both new and advanced trades. They allow for swing trading and also breakout and momentum trading. Make sure that whatever new strategy you are looking to test for the first time you do it on free demo charts risking no real money. You should never risk real money in a live trading account until you know that the strategy or system you are using works and can consistently make you profits.
Pip Hunter I hunt pips each day in the charts with price action technical analysis and indicators. My goal is to get as many pips as possible and help you understand how to use indicators and price action together successfully in your own trading.
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