Horizontal tunnels are one of the best signals you can find in forex (or any other markets). They simply signalize that market has paused, gaining strength for new, substantial move. In trend it is more likely that price will continue in its previous direction. This slight statistical edge equals money in the pocket, if we use equal stop and take profit targets.
Used forex indicators
MACD (moving average convergence divergence) 48,102,9
Skills
Trendline drawing, horizontal tunnel identification (support and resistance zones) Timeframe
Recommended 15 min and EURUSD, however this strategy works in any timeframe above 5 min and any currency pair.
Forex strategy rules
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BUY:
MACD histogram closing above zero – uptrend
We can draw a horizontal tunnel connecting at least two tops (creating resistance) and two bottoms (creating support). Supports and resistances are zones, not lines, draw them as such. Find price zone that influenced the price the most in previous peaks and valleys.
We switch to lower timeframe (from 15 min to 5 min).
We wait for first bullish candle to clearly close above resistance. We enter long on candle close.
Take profit: Total width of the range. (from entry to support)
Stop loss: Total width of the range.
SELL:
MACD histogram closing below zero – downtrend
We can draw a horizontal tunnel connecting at least two tops (creating resistance) and two bottoms (creating support).
We switch to lower timeframe (from 15 min to 5 min).
We wait for first bearish candle to clearly close below support. We enter long on candle close.
Take profit: Total width of the range. (from entry to resistance)
Stop loss: Total width of the range.
Notes: Width of the range is applied starting from entry.
