This trading strategy is designed for the medium-term perspective. In order to enter the market it is recommended to wait for the clear signals from all indicators on both timeframes. Take profit is advisable at the level of 80-90 points. Stop-loss can be placed at the level of 50 points.
Open two charts for the same currency. On the first chart you should place timeframe H4 and on the other – timeframe D1. For this trading strategy we will the following indicators:
1) Moving Average with a shift equal to 3. This indicator is set on the four-hour and on the daily charts.
2) MACD with the parameters 12,120 and 5.This indicator is set on the chart H4.
3) RSI with the setting of the levels 30 and 70. This indicator is set on the chart H4.
Now, look at the chart with the timeframe D1. If the closing price of the previous daily candlestick is below the moving average, we expect the decline in the exchange rate on the chart H4. If the closing price of the previous daily candlestick was above the moving average, it is likely that the exchange rate will rise on the chart H4. After determining the potential trend on the daily chart, we can open the chart with the timeframe H4 and evaluate the readings of the indicators.
1) MACD. Histogram is above or below zero.
2) RSI. Upward or downward direction.
3) The candlestick is closed either below or above the moving average.
The first example
As an example we will use the charts USD/JPY D1 and USD/JPY H4.
Let’s view the chart D1. Closing price of the previous daily candlestick is below the moving average. Let’s consider the option of lowering of the exchange rate. Open the chart with H4. Closing price of the last candlestick of the previous day is below the signal line. MACD histogram is in the positive zone, but its volumes are rapidly decreasing, which gives us a sell signal. The indicator RSI has left the oversold zone and is directed downwards; however it has not reached the overbought zone, which gives us a sell signal. (Pic. 1 and 2).
Pic.1
Pic.2
The second example
As an example we will use the charts AUD/USD D1 and AUD/USD H4.
Closing price of the previous daily candlestick is above the signal line. Let’s consider the option of the rise in the exchange rate. Open the chart AUD/USDH4. Closing price of the last candlestick of the previous day is above the signal line, which is a confirmation of the uptrend. MACD histogram is in the negative zone, but its volumes are rapidly decreasing, which shows buying activity and continuation of the uptrend. RSI is directed upwards, but has not reached the overbought zone yet, which is a signal to buy (Pic. 3 and 4).
Pic.3
Pic.4