Bearish weekly breakout strategy

 Bearish weekly breakout strategy is a breakout method that works most of the time.It is a stress-free strategy because it is a set-up that refreshes once a week.The set-up works on the low of a weekly candlestick.Hence, one needs to know how to identify the OHLC of a weekly candle in order to maximise this strategy.

In order to sell using this method,we have to identify the low of last week.We expect that the bearish momentum will be high once the price moves and breaks the weekly low of last week.So we will place an order to sell the currency pair at 5 pips below the low.

 

 We have just been able to establish an entry signal which is an essential part of the strategy.Now we need to state the suitable exit signals too.The stop loss for the system is 50 pips while the trailing stop is also 50 pips.The trailing stop is used instead of take profit so as to maximise profit.

This is designed to detect and ride the weekly bearish momentum.It is so simple that any disciplined trader will make a living from it. The favourite pairs for this method of trading are EURUSD, USDCAD, USDCHF, GBPUSD, USDJPY and AUDUSD. I so much like these pairs that I don`t think of any other pairs beside them.

The diagram above is a 4Hour EURUSD chart.The two white vertical lines above are called period separators and they contain thirty 4hour candles which make a whole week when summed together.Now, the yellow horizontal line indicates the weekly low which is enclosed by the yellow triangle.The next blue triangle shows where price eventually breaks the low.This is just the way the strategy works.You may please forward your email or leave comments. I am the author of this blog. I can write for you on your forex blog too for a token.

Creative use of moving average 200 on daily chart

Moving average is one of the oldest and most relevant technical indicator in the market today.It can be used to determine the on-going trend and to generate trading calls from time to time. This indicator has proved its reliability over a long period of time.I have been using moving average indicators for as long  as far back as I started trading around 2007.Let us see how it can be creatively applied.

 

Moving average indicators function in the same way and capacity as a correctly-drawn trend-lines. We have a rising moving average in an uptrend and a falling  one in a downtrend just like the trendlines.
The application is to either trade the rejection(test of significant price levels or false breakout) or break-out.This has to be explained before we continue.

The diagram above shows the 200-day EMA in action.We had a situation of false breakout here.In this case, a green candle in  the yellow ring opened and closed above the EMA. This ought to give us the signal to open a long position.But the next candle was a bearish one which successfully broke the low of the green one in the yellow ring.The conservative practice is to sell by placing an order below that same red candle.

 In the picture above is a scenario which we can call "true breakout."We have it that a red candle which is also a bearish one opened above the 200-day EMA and sustainably closed below it.The expectation of the bears would be high under such conditions.Be that as it may, they still have to be conservative and wait for price to fall further below the low of the red candle in the yellow ring by atleast 5 or 10 pips.Then and only then can we say that we have a true breakout.And then the momentum is on the bearish side.We can then expect a great and sudden fall.
This is one of my many applications of the moving average indicator and it is my favourite set-up as well.You may please forward your email or leave your comment.I am the author of this blog. I can write for you on your forex blog too for a token.