Doji candle, drawn on our timeframe simply represents a range existing on lower timeframes. What we see as a reaction to doji star, can be considered a breakout by traders in shorter time ranges. This forex strategy uses this mini breakout to its advantage. What it looks for, is a breakout within the breakout. This is achieved by looking for a doji reaction formation, once the price break outside of BB tunnel boundaries.
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Strategy trades on reliable and fundamentally sound formation. Each trade is protected by stop loss with break even condition. Once the price reaches predetermined profit, possible reversal is avoided.
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We have created expert advisor trading this forex strategy and we have tested it on EURUSD 1H historical data with positive results. It is certain, that strategy works just as well on any timeframe and currency pair. If you like, make sure that you leave a comment !
Forex strategy tools and indicators
Bollinger bands forex indicator (deviation 3, period 60): Standard tunnel is drawn. Price must trade either above or below the tunnel boundaries so we can approach a second level signal. In EA you can adjust BB deviation and period, to manipulates signal sensitivity and test the strategy for all the timframes and forex currency pairs
Doji star reaction signal: Doji, candle with narrow body will be followed by strong bullish/bearish candle closing above its high or low. This will be considered to be a breakout on lower timframes and our signal. We enter on signal candle close. Maximum doji star size (body) can be adjusted in inputs.
Break even condition (after 30 pips in test): Stop loss is moved at position open once the trade reaches predetermined profit.
Those settings were used for our successful test on 1H EURUSD chart. Tests have revealed 100+ profitable settings on EURUSD alone.
Forex strategy rules
Price closes below bottom BB. Downward momentum is present in the market.
Doji star is followed by strong bearish candle, closing below its low (signal candle). We enter the trade short on new candle open.
Price closes above bottom BB. Upward momentum is present in the market.
Doji star is followed by strong bullish candle, closing above its high (signal candle). We enter the trade short on new candle open.
Stop loss: 80 pips
Take profit:100 pips
Break even after: 30 pips
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Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.As seen in screenshots. Fully customisable.