Forex strategy utilizing combination of moving averages represented by single forex indicator – alligator, and trusted candle formations: morning and evening star. This chart formation together with statistical advantage provided by trading with moving average crossing offers a great entry signal with extremely favorable risk reward ratio.
This is ensured by using alligator to ride the trend as formation alone cannot provide good enough profit target (as it is entry formation).
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Used forex indicators:
Alligator forex indicator (26,16,1): Properly aligned alligator line will provide us with information regarding the trend direction. Fast MA (green) will notice us on trend losing momentum and enables us to exit the trade with profit.
Forex strategy rules
Alligator line are properly aligned to uptrend (from top: green, red, blue) and untangled.
We will be looking for a morning star forex formation:
Morning star consists of three candles:
Wide bearish candle.
Narrow bearish or bullish candle closing below the first candle. Ideally gap is created between the two.
Wide bullish candle closing above the high of first candle. Once it closes signal is complete. We enter the trade long.
Stop loss is placed below the formation low.
Take profit: Take profit is initialized once green alligator line crosses red line downwards.
Alligator line are properly aligned to downtrend (from top: blue, red,green) and untangled.
We will be looking for an evening star forex formation:
Evening star consists of three candles:
Wide bullish candle.
Narrow bearish or bullish candle closing above the first candle. Ideally gap is created between the two.
Wide bearish candle closing below the low of first candle. Once it closes, signal is complete. We enter the trade short.
Stop loss is placed above the formation high.
Take profit: Take profit is initialized once green alligator line crosses red line upwards