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Momentum FOREX strategy

This forex strategy pursues price breakout that occurs on envelopes indicator. Envelopes are marking average high and low of the price. When price escapes those boundaries, it often times signalizes breakout or growing price momentum in the direction of trend. Breakout of envelopes lines alone is a good entry signal (with right money management).

Additionally, CCI forex indicator is used not to identify overbought/oversold zones, but to also signalize/confirm momentum. This Forex system tends to catch significant market movements that are usually too sudden and fast to be entered with other forex strategies.

Momentum FOREX strategy

Used forex indicators:

CCI (commodity channel index) period 21

SMA (smoothed moving average) period 200

Envelopes (default MT 4 settings)

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Forex strategy rules

First thing we need to do is to plot SMA into our forex chart. It should be one of the major pairs in 15 min timeframe. It is also possible to use higher timeframes up to a one day.

Trend will be identified by comparing envelopes (faster period) to slower period SMA. In uptrend envelopes will trend above SMA. In downtrend they will trend below SMA. We will enter only trend following trades.

SELL:

Momentum FOREX strategy

Envelopes forex indicator is trending below SMA – downtrend. While both envelopes lines remain under SMA we will enter only trend following - short trades.

Entry: CCI 21 falls below -100 line. This will signalize that selling that came into the market and its likely to continue to drive the price downwards.

After we confirm that CCI has fallen below -100 line, we wait for bearish candle to clearly close below red envelopes line. We enter immediately on candle close. Stop loss is placed above the entry candle high, just after we enter the position.

Take profit: To exit our winning position, we wait for price to return within Envelopes tunnel and touch upper (blue) envelopes line.

BUY:

Momentum FOREX strategy

Envelopes forex indicator is trending above SMA – uptrend. While both envelopes lines remain above SMA we will enter only trend following - long trades.

Entry: CCI 21 rises above 100 line. This will signalize that buying that came into the market and its likely to continue to drive the price upwards.

After we confirm that CCI has risen above 100 line, we wait for bullish candle to clearly close above blue envelopes line. We enter immediately on candle close. Stop loss is placed below the entry candle low, just after we enter the position.

Take profit: To exit our winning position, we wait for price to return within Envelopes tunnel and touch bottom (red) envelopes line.

Notes: After our winning position reaches significant profit, experience can help us to predict swing reversal and exit position before it touches envelopes line. By using this approach we can increase our risk reward ratio and gain couple more pips from every winner.

ABOUT US

THEFOREXKINGS

“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

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