This strategy uses price candle, that signalizes strong movement reversal within chosen timeframe. It is one of the most one sided candle signals that you can encounter trading in forex. Its reliability is increased by adding RSI for trend identification.
Used forex indicators
RSI (relative strength index) period 50. 50 line is also added to its chart, to separate downtrend from uptrend.
Forex strategy rules.
Any major currency pairs. Timeframe: above 15 min.
BUY:
RSI trending above 50 line.
Bullish signal candle: Wide candle body. Bottom wick is at least same size as body. Narrow, or none upper wick.
Underlying movement: Bears tried, and succeeded to push the price down within the candle. Bulls reacted strongly with aggressive buying that pushed the price up within the candle. Candle consequently closed near its high. In other words: Bears took the beating. Bulls are more interested in the price. More people are buying on correction.
Stop loss: Placed below the low of the formation.
Take profit: RSI crosses 50 line downwards.
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SELL:
RSI trending below 50 line.
Bearish signal candle: Wide candle body. Upper wick is at least same size as body. Narrow, or none bottom wick.
Underlying movement: Bulls tried, and succeeded to push the price upwards within the candle. Bears reacted strongly, with aggressive selling that pushed the price down within the candle. Candle consequently closed near its low. In other words: Bulls have lost. Bears are more interested in the price. More people are selling on correction.
Stop loss: Placed above the high of the formation.
Take profit: RSI crosses 50 line upwards.
