MACD filtered price testing, FOREX strategy

Successful test is one of the main signal of trends health and its strength. Test, even as a standalone signal offers great risk reward ratio and often times marks the best possible entry within the trend. It is not uncommon, that test is immediately followed by massive price movement. Those movements can be easily used to our benefit in this forex strategy.

 

Used forex indicators

MACD (moving average convergence divergence) 48,102,9

Tools

Candle formationtest in forex.

 

Forex strategy rules

Timeframe: above 15 min.

Currency pair: any

 

BUY:

 

MACD histogram closing above zero line – uptrend is in progress.

 

Finding test formation:

Bearish candle with extremely tall bottom wick. Bottom wick is at least double the size of candle body plus it upper wick.

Next candle is strongly bullish closing above the open of firs signal candle (ideally above its high). Sometimes market pauses, creating a narrow candle within the formation. Signal remains valid if this candle does not surpass low of the formation, reached by first bearish candle.

We enter long placing Stop loss below the low of first signal candle.

Take profit: At least double the size of signal formation.

 

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SELL:

 

MACD histogram closing below zero line – downtrend is in progress.

 

Finding test formation:

Bullish candle with extremely tall upper wick. Upper wick is at least double the size of candle body plus it bottom wick.

Next candle is strongly bearish closing below the open of first signal candle (ideally below its low). Sometimes market pauses, creating a narrow candle within the formation. Signal remains valid if this candle does not surpass high of the formation, reached by first bullish candle.

We enter short placing Stop loss above the high of first signal candle.

Take profit: At least double the size of signal formation.

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THEFOREXKINGS

“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

—  Marian, Proprietor of TheForexkings.com