NZDJPY - 4HR - example of "Rubber-Band Trade"
Here is a favorite trade of mine I thought I'd share.
1. We are looking for the 50-SMA to indicate a downtrend (Angle is going down)
2. I am looking for price to break above the 50-SMA and several candles to close above making an ARC.
3. Then I want to find the high of that move which I use a Bearish Candlestick pattern:
Doji, Pin-Bar, Bearish Engulfing, etc.
4. I use the RSI as a momentum/overbought indicator. Looking for it to be oversold and making
lower highs. It doesn't have to show lower highs, may just head down. As long as it's in an area
showing overbought, that's good enough.
Buy @ close of next candlestick, which should close below the previous bearish one.
Stop loss is just above the peak candlestick.
Target #1 is 50-SMA
Target #2 is bottom of Bollinger Band
1. We are looking for the 50-SMA to indicate a downtrend (Angle is going down)
2. I am looking for price to break above the 50-SMA and several candles to close above making an ARC.
3. Then I want to find the high of that move which I use a Bearish Candlestick pattern:
Doji, Pin-Bar, Bearish Engulfing, etc.
4. I use the RSI as a momentum/overbought indicator. Looking for it to be oversold and making
lower highs. It doesn't have to show lower highs, may just head down. As long as it's in an area
showing overbought, that's good enough.
Buy @ close of next candlestick, which should close below the previous bearish one.
Stop loss is just above the peak candlestick.
Target #1 is 50-SMA
Target #2 is bottom of Bollinger Band