Forex Scalp Retracement
This is a system that is easy to use using a 5 mintue timeframe on a GBPUSD and EURJPY chart.
Indicators needed for this strategy are listed as follows:
- 55 EMA
- MACD set to 4, 9, 6
For LONG entry:
- The closing price must be above EMA 55 on H1 chart;
- The closing hourly candlestick must be a bullish candlestick
- MACD must show a positive divergence or show a higher low bar.
- Switch to 5 min if above conditions are met.
Scenario A:
- Look for 38% or 50% Fibonacci retracement (support) from the recent swing low on hourly chart.
- Open long position if the candlestick went below but closed above the retracement level (either 38% or 50 %);
- set stop loss at 61,8% or recent swing low if your risk per trade allows.
Scenario B:
- If the price action does not retrace to 38% level, open long position at the break of the previous hourly candle’s high;
- set stop loss at 61,8% or at recent swing low.
For SHORT entry:
- The Closing price must be below 55EMA on The Hourly Chart;
- The closing hourly candlestick must be a bearish candlestick;
- MACD bar must cross below the Signal EMA on the hourly chart and color must be red.
- Switch to 5 min chart after the conditions are met.
Scenario A:
- Look out for 38% or 50% Fibonacci retracement (resistance) from the recent swing high on hourly chart.
- Open short position if the candlestick went below but closed above the retracement level (either 38% or 50 %);
- Set stop loss at 61,8% or recent swing high if your risk per trade allows.
Scenario B:
- If the price action does not retrace to 38% level, open short position at the break of the previous hourly candle’s low;
- Set stop loss at 61,8% or at recent swing high.
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