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Reversal Forex Candlestick Strategy
This system works in all currency pairs and applicable to 4 hour, daily and weekly timeframe.
Forex Indicators:
- CPI, Pattern Recognition Master;
- Stochastic (14, 6,3).
Rules:
- Using basic Japanese Candlesticks;
- Stochastic must be in the oversold/overbought area (80/20);
4 Major Reversal Candlestick Patterns:
- Bullish/Bearish Engulfing Patterns;
- Bullish/Bearish Harami Patterns;
- Bullish Hammer/ Bearish Hanging Man/Shooting Star Patterns;
- Piercing Line.
The Candlestick bullish patterns are confirmed by Stochastic being in Oversold area.
The Candlestick bearish patterns are confirmated by Stochastic being in Overbougth area.
Entry point will be based on the close of the confirming candle of the trend.
Remember to only enter a trade after you have spotted a changing trend in which it has been confirmed by another candle after the reversal pattern,
and with the Stochastic as a second confirmation.
Stop loss for Long Entry:
- Place your stop loss 20 pips under your entry point or 10 pips below the lowest candle point within the past 4 day period.
Stop loss for Short Entry:
- Place your stoploss 20 pips above your entry point or 2 pips above the highest candle point within the past 4 day period.
Target Profit on daily Pivot; to close position at the closed bar entry.
4H TF: EUR/USD 25 pips, AUD/USD 18 pips, GBP/USD 30 pips, EUR/JPY 30 pips, GBP/JPY 33 pips.
Daily TF:EUR/USD 50 pips, AUD/USD 40 pips, GBP/USD 60 pips, EUR/JPY 60 pips, GBP/JPY 65 pips.
You can also trail stop once it reaches 20 pips target, but it also depends on the currency pair. You will need 10 to 20 pips.
Remove profit target and stop loss if you insert this and allow trail stop to follow as the trend continues.
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