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4 hour forex charts

4 hour forex charts

The main cornerstones of this strategy are as follows:

For an uptrend, the trend should meet the following conditions:

  • Price action is above the two moving averages
  • Price stays above the moving averages
  • The 34 MA is above the 55 MA and stays above the 55 MA
  • The MAs are sloping upwards for most of the time as they follow the trend

​For a downtrend, the same applies just in the opposite direction:

  • ​Price action is below the two moving averages
  • Price stays below the moving averages
  • The 34 MA is below the 55 MA and stays below the 55 MA
  • The MAs are sloping downwards for most of the time as they trail behind the trend

​Entry rules:

  1. There needs to be a trend on the 4h with the moving averages lined up as described earlier.

  • Enter on the breakout once price closes past the trendline (on 1h chart).
  • ​An example of how an entry with this strategy would look like is shown below.

    ​Initial stop loss placement:

    1. Place the ATR (average true range) indicator on the D1 chart.
    2. Set the stop loss to 30% of the daily ATR behind your entry level (which is the break of the trendline).
    3. Add the spread to the stop loss (for some more exotic currency pairs the spread can often be 15 or more pips which can make a big difference on the 1-hour timeframe in terms of when your stop loss will be triggered).

    ​Risk management:

    • Once the price has moved 30% of the daily ATR in profit, move the stop loss to break even.

    ​Take profit rules:

    In a downtrend:

    1. As the price makes new lower lows, find the most recent lowest low.

    Here’s how this trailing stop looks on a chart.

    As the downtrend progresses with each new lower low, the counting for the trailing stop should re-done again and the stop moved lower.

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