Envelopes breakout - scalping FOREX strategy

Price escaping envelopes boundaries signalizes very sudden movement of price. In most of the cases, movement that is fast enough to penetrate them, and closed beyond the tunnel can be considered a breakout. Nature of the breakout is to establish new price development. However with this strategy we are not going to get to greedy. We will be looking to scalp on the breakout candle.

 

Forex indicators

Envelopes (default settings)

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Forex strategy rules

Currency: Majors, timeframe: 30 minutes - 4H.

 

We plot envelopes forex indicator on the chart

We wait for tall bodied candle, to close beyond the envelopes boundaries, leaving at least half of its body within the envelopes tunnel.

 

Sell order:

 

Candle penetrated bottom line of envelopes (red). Closing outside of the tunnel, leaving at least half of its body within the tunnel.

We enter short on candle close, placing stop loss at price level at which candle penetrated bottom envelopes line.

For a take profit we wait for first bearish candle to close in profit.

 

Buy order:

 

Candle penetrated upper line of envelopes (blue).

Closing outside of the tunnel, leaving at least half of its body within the tunnel.

We enter long on candle close, placing stop loss at price level at which candle penetrated upper envelopes line.

For a take profit we wait for first bullish candle to close in profit.

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