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Envelopes day trading FOREX strategy

Envelopes forex indicator is used to establish price tunnel. Price crossing either of tunnel boundaries is traded as standard breakout. We will be using tight stop loss with take profit wider than typical. Additionally RSI forex indicator is used to identify trend and filter out corrections that could lead to price reversal.

Strategy works best in 1 hour timeframe but can applied on almost any currency pair in any timeframe. It is based in fundamental market principle of breakout, momentum and trend and therefore it is particularly salable.

Used forex indicators:

  • Envelopes forex indicator (period 20) Purpose: Envelopes with slow calculation period is used to draw a relatively stable and adaptable price tunnel, based on average low and high price. Price closing outside of its boundaries will be used as our entry signal. At the same time envelopes indicator will mark levels for our stop loss and take profit targets

  • RSI (relative strength index). RSI with calculation period 60 is used to filter out any other than trending market conditions. To use RSI in such a way using additional line (50) is required.

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Forex strategy rules

SELL

RSI 60 is trending below 50 line. This will signalize donwtrend and we will enter only short trades.

Envelopes indicator will provide a signal. We enter on price candle closing clearly below red envelopes line.

Stop loss is placed above the high of our signal candle.

Take profit: After the price travels distance that equals candle range we move stop loss to break even. Target profit equals distance between entry and blue envelopes line (it is mirrored downwards in the direction of trend).

Signal reset: We enter another trade in the same direction only after a trade closing or full body of candle (opened and closed) within the tunnel.

BUY

RSI 60 is trending above 50 line. This will signalize utptrend and we will enter only long trades.

Envelopes indicator will provide a signal. We enter on price candle closing clearly above blue envelopes line.

Stop loss is placed below the low of our signal candle.

Take profit: After the price travels distance that equals candle range we move stop loss to break even. Target profit equals distance between entry and red envelopes line (it is mirrored upwards in the direction of trend).

Signal reset: We enter another trade in the same direction only after a trade closing or full body of candle (opened and closed) within the tunnel.

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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—  Marian, Proprietor of TheForexkings.com

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