Forex 1 Hour Reversal Trading Strategy
The one-hour chart is the primary target of this strategy for bearish reversals. It can, however, also be applied successfully to the 15 and 30 minute charts. There are three indicators in this strategy. Among these indicators are:
1. Weighted Moving Average for 14 Periods (closed)
2. SAR that is parabolic (.02,.02,.2) Start:.02 Max Value=.2; Increment=.02
3. Stochastic (14,3,3) Smooth=3 80/20 Levels K=14 D=3
How to Trade
Trading this strategy is easy, but because of the increased chance of profit, it could be challenging to identify good setups. Three guidelines must be adhered to in order to trade this strategy successfully:
1. The stochastic indicator needs to be above the 80 level in order to display overbought conditions.
2. The price must be above the Parabolic SAR, not below it.
3. We must take the trade from the candlestick that closes below the Weighted Moving Average.
Here's an illustration of the ideal configuration:
The stochastic indicator indicated that the price was overbought, as you can see. The candlestick from which we took the trade closed BELOW the Weight Moving Average, and the Parabolic SAR was above the price. As indicated by the red arrow, we would have made the trade right before the candle closed.
Here's an additional illustration:
The one-hour chart is the primary target of this strategy for bearish reversals. It can, however, also be applied successfully to the 15 and 30 minute charts. There are three indicators in this strategy. Among these indicators are:
1. Weighted Moving Average for 14 Periods (closed)
2. SAR that is parabolic (.02,.02,.2) Start:.02 Max Value=.2; Increment=.02
3. Stochastic (14,3,3) Smooth=3 80/20 Levels K=14 D=3
How to Trade
Trading this strategy is easy, but because of the increased chance of profit, it could be challenging to identify good setups. Three guidelines must be adhered to in order to trade this strategy successfully:
1. The stochastic indicator needs to be above the 80 level in order to display overbought conditions.
2. The price must be above the Parabolic SAR, not below it.
3. We must take the trade from the candlestick that closes below the Weighted Moving Average.
Here's an illustration of the ideal configuration:
The stochastic indicator indicated that the price was overbought, as you can see. The candlestick from which we took the trade closed BELOW the Weight Moving Average, and the Parabolic SAR was above the price. As indicated by the red arrow, we would have made the trade right before the candle closed.
Here's an additional illustration:
