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Indicators Used:
Volume Indicators:
Awesome Oscillator (AO)
On-Balance Volume (OBV)
Chaikin Money Flow (CMF)
Liquidity and Volatility Indicators:
Bollinger Bands (BB)
Average True Range (ATR)
Keltner Channel
Key Levels Indicators:
Fibonacci Retracement
Moving Averages (50-period EMA & 200-period EMA)
Momentum Indicator:
Relative Strength Index (RSI)
Price Action Tool:
Horizontal Support and Resistance Levels
How to Identify Key Levels of Support and Resistance:
Horizontal Support and Resistance:
Support: A price level where the market has bounced upward multiple times in the past. At least 2 to 3 times
Resistance: A price level where the market has reversed downward multiple times. At least 2 to 3 times
How to Identify:
Look for levels where price has historically reversed or stalled. These are horizontal zones where price touched or bounced several times. At least 2 to 3 times
Psychological Levels:
Round Numbers: Traders often react strongly to "round numbers" (e.g., 1.1000, 1.1500 in EUR/USD), which can act as natural support or resistance.
Strategy Overview:
This strategy involves waiting for confluence among the volume indicators, volatility indicators, and key level indicators to confirm entries. We use price action with horizontal support/resistance levels and Fibonacci retracements as an extra filter to confirm the entry and avoid false breakouts.
BUY TRADE SETUP
Step 1: Identify Market Conditions with Trend Confirmation
Trend Direction: Ensure the market is in an uptrend by checking the 50-period EMA above the 200-period EMA. This confirms the market bias is bullish.
Step 2: Liquidity and Volatility Confirmation
Bollinger Bands (BB): Look for a Bollinger Band squeeze (bands contract), which indicates the market is consolidating and building liquidity.
Keltner Channel: Confirm that the price is within the Keltner Channel (shows consolidation).
Average True Range (ATR): ATR should show low volatility (declining ATR) to signal that a breakout may be imminent.
Step 3: Volume Confirmation
Awesome Oscillator (AO): Should show green bars above the zero line to confirm bullish momentum.
On-Balance Volume (OBV): OBV should be rising as price approaches key support or Fibonacci retracement level, indicating buying pressure.
Chaikin Money Flow (CMF): CMF should be positive (above zero) to confirm buying pressure and that money is flowing into the market.
Step 4: Identify Key Support Level
Horizontal Support/Resistance: Ensure price is near or bouncing off a strong horizontal support level or a Fibonacci retracement level (38.2% or 61.8%).
Moving Averages (MA): Price should be either bouncing off the 50-period EMA or remaining above the 200-period EMA.
Step 5: Momentum Confirmation
RSI: RSI should be above 50, ideally around 30-50, indicating that the market is not overbought but has room for an upward move.
Step 6: Entry Trigger
Wait for price to close above the upper Bollinger Band following the contraction. This indicates that the market is breaking out of a liquidity zone with rising volume and volatility.
Entry Criteria (Buy):
Entry: Enter a buy trade when price breaks and closes above the upper Bollinger Band with confirmed volume signals from AO, OBV, and CMF.
Stop-Loss: Set stop-loss in 100 points.
Take-Profit: Use a risk-to-reward ratio of at least 1:3, or take profit at the next resistance level or when price starts to contract and volatility decreases (ATR declines).
SELL TRADE SETUP
Step 1: Identify Market Conditions with Trend Confirmation
Trend Direction: Ensure the market is in a downtrend by checking the 50-period EMA below the 200-period EMA. This confirms the market bias is bearish.
Step 2: Liquidity and Volatility Confirmation
Bollinger Bands (BB): Look for a Bollinger Band squeeze (bands contract), signaling liquidity buildup.
Keltner Channel: Confirm price is near or inside the Keltner Channel.
Average True Range (ATR): ATR should show low volatility (indicating consolidation), with the expectation that volatility will soon increase.
Step 3: Volume Confirmation
Awesome Oscillator (AO): AO should show red bars below the zero line, indicating bearish momentum.
On-Balance Volume (OBV): OBV should be declining as price nears resistance, showing that sellers are in control.
Chaikin Money Flow (CMF): CMF should be negative (below zero) to confirm selling pressure.
Step 4: Identify Key Resistance Level
Horizontal Support/Resistance: Ensure price is near or being rejected from a strong resistance level or a Fibonacci retracement level (38.2% or 61.8%).
Moving Averages (MA): Price should either be rejected from the 50-period EMA or remain below the 200-period EMA.
Step 5: Momentum Confirmation
RSI: RSI should be below 50, ideally in the 50-70 range, indicating that the market is not yet oversold and has room for a downward move.
Step 6: Entry Trigger
Wait for price to close below the lower Bollinger Band following a squeeze and expansion. This signals a breakout from a liquidity zone, confirming increased volatility and volume.
Entry Criteria (Sell):
Entry: Enter a sell trade when price breaks and closes below the lower Bollinger Band, with volume confirmation from AO, OBV, and CMF.
Stop-Loss: Place the stop-loss in 100 points and Take-Profit Aim for a risk-to-reward ratio of at least 1:3, or take profit at the next support level or when price starts contracting again with ATR decreasing.
Summary of Entry Conditions:
BUY SETUP:
Trend: 50 EMA > 200 EMA.
Liquidity/Volatility: Bollinger Band squeeze, confirmed by low ATR and Keltner Channel.
Volume: AO green above zero, OBV rising, CMF positive.
Key Levels: Near support or Fibonacci retracement (38.2% or 61.8%), or bouncing from 50 EMA.
RSI: Above 50 (ideally 30-50).
Entry Trigger: Price closes above the upper Bollinger Band.
SELL SETUP:
Trend: 50 EMA < 200 EMA.
Liquidity/Volatility: Bollinger Band squeeze, confirmed by low ATR and Keltner Channel.
Volume: AO red below zero, OBV declining, CMF negative.
Key Levels: Near resistance or Fibonacci retracement (38.2% or 61.8%), or rejected from 50 EMA.
RSI: Below 50 (ideally 50-70).
Entry Trigger: Price closes below the lower Bollinger Band.
TIME FRAMES:
5mnt to 1hrs.
COMMON TRADING PAIRS:
All forex major currency pairs and Gold (XAUUSD)
RISK MANAGEMENT:
Stop-Loss: Place stops just 100 Points.
Take-Profit: Use a 1:3 risk-to-reward ratio and adjust based on major support or resistance levels.