This forex strategy uses ADX to filter out any other than trending conditions. Position is entered in the direction of breakout and the trend. Breakout entry is identified on envelopes forex indicator that will draw tunnel boundaries for us.
Envelopes entry is one of the best entry signals and coupled with correct trend direction can bring amazing results.
Forex indicators used in strategy
ADX (average directional movement index) period 80. Apply additional line (yellow) with value 10. It will separate trending from ranging conditions and help us to trade on the right side of the market. ADX will determine the trend and confirm sufficient momentum of our breakout.
Envelopes forex indicator: This simple indicator will draw us a tunnel boundaries consisting of average low and high price. Breakout of either of those lines can be considered to be a valid breakout and our signal, if confirmed by ADX.
Apply both indicators in 1H chart of any major currency pair. For the best results, trade with professional ECN/STP broker with MT4. If you can't trade with profit. Automatically copy the traders that are already profitable.
Forex strategy rules
BUY
ADX green trending above ADX red. Main ADX line (blue) is above yellow line, signalizing sufficient trend strength.
Signal: Breakout of blue envelopes line. Candle closing above it. We enter the trade on candle close placing stop loss below the candle low.
Take profit: Double the size of signal candle range. After the price travels distance that equals candle range, stop loss is placed at break even.
SELL
ADX green trending below ADX red. Main ADX line (blue) is above yellow line, signalizing sufficient trend strength (momentum).
Signal: Breakout of red envelopes line. Candle closing below it. We enter the trade on candle close placing stop loss above the candle high.
Take profit: Double the size of signal candle range. After the price travels distance that equals candle range, stop loss is placed at break even.
Signal reset: Before entering another trade in the same direction make sure that at least on candle opened and closed within envelopes tunnel boundaries.
