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Multi majors trading strategy
Information is not investment advice
Today we are going to explain another strategy, which fits for the trading of majors. It is called multi majors strategy because you do not need to adapt it specifically to each pair. It works perfectly with them and provides you more signals compared to other strategies. Let’s consider what you need to implement to start taking advantage of this strategy. The strategy requires the usage of the following indicators:
• Heiken Ashi. Read about the indicator here.
• RSI with the period which equals 3.
• Stochastic indicator with the following settings: %K period=6, %D period=3 and Slowing=3
• Smoothed moving average with the 150 period.
You can implement the strategy while trading all of the majors and popular crosses on H4 or D1 timeframes.
When do you need to open a long position?
The price should be placed above the smoothed moving average.
RSI leaves the oversold zone (crosses the 20 level from bottom to top).
One of the lines of the stochastic indicator leaves the oversold zone. Note, that the signals on both RSI and Stochastic indicator may not appear at the same time, as stochastic indicator usually comes later. You may take into account these signals as well. However, it is important for RSI not to enter the overbought zone when the signal on the stochastic appears.
- Heiken Ashi is used as a filter. The candlesticks should be green, as it shows that the market is going up.
The example below illustrates how to apply the strategy on practice.
On H4 timeframe of EUR/USD, the chart was placed above the smoothed moving average. Both RSI and Stochastic indicators left the oversold zone on January 9. We waited for the candlestick for the price to break the previous resistance and opened a position at 1.1943 (closing price of the green candlestick). We place our stop loss below the previous low at 1.1912. Our take profit is placed at the previous resistance level at 1.2070. As a result, with a risk of 31 pips, we earned 127.
Now, let’s consider the situation when you can open a short position.
- The chart should be placed below the smoothed moving average.
- RSI leaves the overbought zone (crosses the 80 level from top to bottom).
- One of the lines of the stochastic indicator leaves the overbought zone.
- Candlesticks with Heiken Ashi are red, thus the prices are going down.
On H4 chart of EUR/USD, the price was moving below the smoothed moving average on July 31, 2018. After RSI and Stochastic oscillators crossed the overbought zone, we waited for the price to break below the previous support and opened a position at 1.1671. Our stop loss is placed above the previous resistance at 1.1718. Take profit is placed at the 1.1599 support level. Thus, we earned 72 pips with a risk of 47 pips.
Multi majors trading strategy helps you to trade more pairs without additional implementations. We can mention only one disadvantage of this strategy. This is the inability to adapt it to the specific features of a pair you trade.
USD/JPY has been rising for almost a week except for Monday, but the strong resistance of the 50-day moving average at 105.80 may stop it from moving higher.
BoA released the report with the bullish forecast for the S&P 500 and shared its technical analysis. Let's discuss it in detail.
EUR/USD has violated the first resistance trendline area 1.1680