This is surprisingly effective forex strategy, solving a lot of issues with breakout trading using single elegant solution. Utilizing fractals and bollinger bands, it is able to find trading range even in unstable market structure. This strategy looks past the bias of fakeouts and is able to immediately establish support and resistance levels accurately and as a zones ! Looking for breakouts suddenly becomes easy and fun.
Used forex indicators
Bollinger bands: period 10
Fractals: default MT4 settings
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Forex strategy rules:
Draw Fractals and BB in chart (above 15min) of any currency pair.
Look for horizontal channel, by finding three bearish fractals lying almost in same price level, and three bullish fractals, lying in almost same price level.
Why almost ? It is next to impossible to find those fractals perfectly aligned in forex. It is also not what we are looking for. Vertical distance between the fractals should be as small as possible. If not sure avoid the signal.
We place horizontal lines at wide base of the highest bullish fractal and base of the lowest bullish fractal. Thus creating support zone.
We place horizontal lines at wide base of the highest bearish fractal and base of the lowest bearish fractal. Thus creating resistance zone.
Sell: Breakout candle closing below support zone. We enter immediately (at market) on new candle open. Stop loss is placed above the high of the tunnel formation. Take profit: Bullish candle closing above central bollinger band.
Buy: Breakout candle closing above resistance zone. We enter immediately (at market) on new candle open. Stop loss is placed below the low of the tunnel formation. Take profit: Bearish candle closing below central bollinger