Trading with Retracement Forex Trend Following Strategy

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Trading with Retracement Forex Trend Following Strategy

This system is a combination of smoothed moving averages and envelope indicator. This works on a daily timeframe. And applicable in any currency pair.

Forex Indicatores needed:

  • Moving average smoothed 3 period;
  • Moving average smoothed 8 period,
  • Envelope indicator period 5 deviation 0.5;
  • Envelope indicator period 5 deviation 1.0. The deviations of the second envelope indicator depends by volatility of the currency pair this is only a indicative value.

Long Entry:

  • Moving average smoothed must cross up 8 Moving average smoothed;
  • The price must pullback.
  • Red candle with body must be within (high/low/close) the upper first red envelope.
  • Place a pending order for the next day 4 pips above the high of the setup candle
  • Stop loss should be place on the previous swing. Move SL after 40-70 pips at -25 pips by entry point. Number of pips depends on the currency pairs.

3 possible exit point.

  • Price must touch the blue envelope band.
  • The moving average smoothed must cross in opposite direction.
    Profit target predetermined 15-=300 pips.

Short Entry

  • Opposite of the buy entry rules:

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