Hey everyone, this is Nathan Tucci and I wanted to share a pretty simple strategy that I like to use when the market is trending on the Daily, 8HR, 4HR and 1HR charts.
It is simply this: if a pair is trending nicely in one direction or the other I am definitely watching it for entries. I use Bollinger Bands to let me know the direction of the trend and when price is over extended. If price has been going up for a while on one of the time frames I mentioned earlier, and has a pull back of a few bars then that REALLY catches my attention. Once that pull back happens, I wait to see what it does near the 20 point moving average. If the price hits the 20sma and looks like it might bounce back up to continue the uptrend, I am looking to take a long position. I zoom up to a 15minute chart and wait for a strong bullish bar (has to be bigger than most of the bars near it and very filled with color. If there is no major resistance or fib levels in the way of a continuation, I will enter after one bullish bar. Let me show you the 4HR chart of the EUR/USD and then the 15minute at the same time where I would actually make the entry.
Here is the 4HR
(click to enlarge)
As you can see, there was a very nice uptrend happening at the time, and price moved back into my 20sma then shot up several hundred more pips. Now let me show you a little more precise look at when I would enter this long position.
Here is the 15minute chart during that pullback and then continuation.
So, a few things to note. 1st of all, the price was all the way past the bottom Bollinger Band on the 5 minute chart, which I am always happy to see in these set-ups because that means price is over-extended in that direction and that band often serves as a slingshot to take price high. 2nd of all, please notice that the bullish bar I enter on is a nice solid bar and stands relatively tall. You don’t want to make an entry on just a tiny bit of green with tales on both sides. 3rd of all, notice that I waited until that 15minute bar had COMPLETELY closed before entering. On a timeframe that short, that full green bar can turn into a long bearish tail in the last 30 seconds of the candle so you need to wait until the next candle is on the chart to make your entry.
Other than those few notes, the strategy is pretty simple and has a very high probability because you’re trading with a strong trend. Remember, the set-up needs to match the few criteria I laid out, and you SHOULD be picky about taking an entry because you can lose money too easily in this market not to be careful.
Thanks for reading and I hope this helps make you some money!
Winner’s Edge Trading, as seen on: