M5-Two-Way-Confirmation-Strategy

Silver, M5, 2011 June 09

Short @ 37.31 (DR1)

Target: 36.40 (mS1) (see also the H4 Range)

EURUSD, M5, 2011 June 09

Long @ 1.4482 (DS2)

See #82

Exit @ 1.4507

Profit: + 25 pips

See #71,#72.


Follow up:
USDCHF, Daily, 2011 June 09

Stochastics Cross, High ADX Value and a Bullish Engulfing Pattern after three Indecision Candles.

We'll see if it could be a false breakout. May be trade H1, H4 at first and if the trade will run "north" let it running further up at Daily. You could also wait for a better entry at a smaller timeframe (M5/M15/M30).

Long @ 0.8417


Bullish Engulfing Pattern
This pattern must occur after a signifcant downtrend. It occurs when a small bearish candle is engulfed by a large bullish candle. This signals a possible reversal. Ignore the wicks. An even stronger signal occurs when the bullish candle engulfs the bodies of two or three previous candles.
http://www.babypips.com/wiki/images/...-engulfing.gif

Read more: http://www.babypips.com/forexpedia/B...#ixzz1OnFKZ8BY

GBPCHF, Daily, 2011 June 09

Long Term Trade:

Two Inside Bars this week! Trend Reversal?

Long @ 1.3778

May be wait for a lower entry chance at M15/M30.

See #86, too.

GBPCHF, Daily, 2011 June 09

Trading the Inside Bar Strategy in Forex
Inside Bar Forex Trading Entry

This article will discuss the Inside bar trading strategy , a trading method I have used successfully for most of my trading career. My trading involves all methods pertaining to price action, they are not used in conjunction with indicators or other systems. I use a plain vanilla price charts tp look for the inside bar and other patterns as they form naturally on 240 minute and daily price charts.

What is an inside bar ?
An inside bar is a bar or series of bars which is/are completely within the range of the preceding bar, or , i.e. it has a higher low and lower high than the bar immediately before it (some traders use a more lenient definition of inside bars to include equal bars). On a smaller time frame it will look like a triangle.

What Does it mean?
An inside bar indicates a time of indecision or consolidation. Inside bars often occur at tops and bottoms, in continuation flags, and at key decision points like major support/resistance levels and consolidation breakouts. They often provide a low-risk place to enter a trade or a logical exit point.

When to use the signal
The most logical time to use an inside bar is when a strong trend is in progress or the market has clearly been moving in one direction and then decides to pause for a short time. If we play the break out, our stop loss can be defined by placing it below the half way point of the outside bar or mother candle, or for the more conservative trader, below the outside bar itself. This would mean that the market muse break a 3 bar low to take us out of the trade.
These inside bars are very good when trading a trend on the 240 minute charts and the daily charts.

Special Notes
More advanced traders may also identify market turning points when trading against the trend, but this wil take plenty of screen time to learn, so its not suggested for novice traders.

The Inside bar forex strategy is a flashing light, a major signal to the trader that reversal or continuation is about to occur.
See the example below for a classic inside bar break out, and a classic inside bar stall pattern.


Article by Nial Fuller - copyright www.learntotradethemarket.com

See below example
http://cache.ltttmstatic.com/wp-cont...bar-images.gif

Inside Bar Trading Strategy

Inside Bar Forex trading strategy — a popular system with a nice win/loss ratio but a rather rare occurrence of the proper entry conditions. It doesn't require any indicators and can be applied on the bare candlestick or bar chart.

Features

 

1. Entry conditions are clearly defined.
2. Very simple bare chart system.
3. High success rate.
4. Rare occurrence of the proper conditions.

How to Trade?

 

1. An inside bar is a bar or a candlestick that completely fits into the first preceding bar (also called a "container" bar), including its High and Low values.
2. If the current bar has an index of 0 and the previous bar has an index of 1 then the following conditions should be true for the current bar to count as an inside bar: High[0] < High[1] and Low[0] > Low[1]. Mind the strict "greater" and "less" operators.
3. Bearish inside bar that follows a bullish "container" bar on the clearly visible uptrend signals a Short position.
4. Bullish inside bar that follows a bearish "container" bar on the clearly visible downtrend signals a Long position.
5. Stop-loss is set to the Low of the "container" bar for the Long positions and to the High of the "container" bar for the Short positions.
6. Take-profit should be set to the nearest support/resistance level formed by the trend.

Example

http://www.earnforex.com/forex-strat...-bar-chart.png


A bullish inside bar after a downtrend is shown on the example chart. The inside bar is easy to identify and the stop-loss level is rather conservative here. The target was set to the resistance level formed by the previous downtrend. As you can see, the currency pair rate reached the take-profit level without any problems.

Warning!
Use this strategy at your own risk. EarnForex.com can't be responsible for any losses associated with using any strategy presented on the site. It's not recommended to use this strategy on the real account without testing it on demo first.

http://www.earnforex.com/forex-strat...e-bar-strategy

Silver, M30, 2011 June 09

Short @ 37.58 (mR2)

See #90

Target: 37.00 (mR1)

See #90, #91.

Silver, M5, 2011 June 10
Silver, M30, 2011 June 10

Exit@ 36.50 (mS2)

Profit: + 108 pips

Multile Time Frame Analysis by switching through the time cells (M15, M30 and so on) could help you not to go out too early with your profit sometimes. Target was 37.00 (mR1). So stay in your trade by high volatility (which also could often be seen at Friday between 14:15 and 15:30 GMT+1).

See #85


GBPCHF, M30, 2011 June 10

Long @ 1.3660

Picking up the Tops and Bottoms at the Bollinger Band
Range-Bound Market
Trading Example

It is common knowledge that the forex market tends to stay range-bound most of the time, in between trending phases and spend most of their time bouncing back and forth between a range of prices trapped between a support and resistance level, insead of always making fresh higher highs or lower lows in an uptrend or downtrend.

Range-Bound Trading can be a very profitable trading stratgegy when the market is ranging.

The example below has pointed out some entry and exit levels based on the Bollinger Band and the Stochastic crossover.

H1/H4 could be the preferred time frames when trading the range bound shorter term by switching at M5 for getting a more qualified entry and exit possibility.

See also the Support and Resistance levels when a trend will come up or another range bound level will achieved.


EURJPY, H4, 2011 June 11

Know Your Trading Environment

By John Russell, About.com Guide

Mechanics of Trading Forex

Know your Trading Environment

What does it mean to know your trading environment? The trading environment is the action around a currency pair's price movement.

Like Knowing the Weather
Just like knowing the weather in a city that you are visiting, you should know how the currency pairs are moving before you enter a trade. Another similarity to the weather is that the price movement of a currency pair provides clues and information that can help you determine the trading environment. Just like high pressure forecasts clear skies and dark clouds precede a storm, indicators forecast certain price movements. But the similarities end here. There can be lots of different types of weather: rain, shine, snow, etc., while the Forex trading environment is limited to two types of price movements: range-bound or trending. Let’s take a look of each type of trading environment.

Range-bound Trading Environment
In a range-bound trading environment, the currency pair stays within a tight trading zone. The high and low prices of the currency pair move within fairly constant and distinct parameters. The currency pair price will remain within these parameters and often bounce off the “walls” of the range. Many traders find range-bound trading quite difficult and frustrating since there is no definable trend to help in anticipating price movement.

Look to the Charts
Chartists are often able to determine whether a currency pair is trading within a range simply by looking at the chart. This type of visual information requires the eye of an experienced trader to obtain accurate results. However, there are other, more reliable, ways to determine if a currency pair is trading within a range.

Three Range-bound Trading Signals

A Low ADX level
The ADX (average directional index) measures the strength of a trend. ADX is one of the primary indicators used to determine the strength of a trend. When a currency pair is trading within a range, the ADX level will decline. Conversely, when a currency pair is trending, the ADX level will rise.
An ADX level below 20 is considered low. It is a strong indicator of a currency trading within a range. When the ADX is at 25, the strength of a trend is growing, but still may not be strong enough yet to break out of the range.

Decreasing Volatility
Volatility refers to the price movement of a currency pair. When volatility is high, currency prices are moving (or trending) strongly. When volatility is low, prices are staying with a tight range.

Bollinger Bands
Bollinger Bands are one of the best indicators of volatility and price movement. A range-bound currency is indicated when the Bollinger Bands grow together. They can begin to squeeze the currency pair. Bollinger Bands are a great visual tool for determining volatility and trading environments. For range-bound trading, we are looking for Bollinger Bands that are close and tight, leaving only a narrow tunnel in which the currency pair can move.

Trending Environment
A trading environment is trending when the currency pair is moving in a strong direction. You have probably heard the phrase saying “the trend is your friend.” In a trending environment, the currency pair is moving decisively in a particular direction—usually up or down. (A sideways trend is more indicative of a range-bound trading environment.) A trend can be visually identified on a chart. However, other tools are available that can help the trader to identify a trend.
A trend is considered long-term when it continues for a year or more. A short-term trend usually lasts less than a month. A medium-term trend is the time between a month and a year. Most traders will focus short-term trends for quick trades, but will look for confirmation from the long-term trend.
Of course, the long- and short-term trends can move in opposite directions. For example, a currency pair may move in a bullish trend for a year (long-term trend) and, during that year, experience several week-long bearish price movements (short-term trends).

Two Trending Trading Signals

High ADX level (25+)
Remember the ADX is the average directional index, which measures the strength of a trend. When the number was below 20 as in the previous example, the trend was weak or nonexistent, which indicates the currency is range-bound. A trending environment will usually have an ADX level that is above 25 and continuing to rise.

Momentum Indicators Confirm Trend
Traders need to know that movement is consistent in the direction of the trend. What are momentum indicators? As the name suggests, they are indicators that gauge momentum. Examples of momentum indicators are RSI (relative strength index), Stochastics, and the moving average converging divergence (or MACD) line. Of course, visually reviewing charts is one of the best ways to establish the trend, its strength, and its momentum.

Trading Tools

 

1. ADX : Determine if it is a high number (trending) or a low number (range-bound).
2. Bollinger Bands: Determine if they are flaring (trending) or tight (range-bound).
3. RSI: Determine if it is a rising number (trending) or a declining number (range-bound).
4. MACD: Determine if the line is rising (trending) or declining (range-bound).

Determining the trading environment is the first step toward successful trading. Taking the time to determine the environment can help you to know if you are trading in the right “weather”. Knowing your time horizon and managing your risk are the next steps in the mechanics of trading Forex.

http://forextrading.about.com/od/tra...ronment_ro.htm

Bollinger Bands

Bollinger Bands are another method of interpreting and analysing market activity. Bollinger Bands are lines that trace the points of resistance and support .The area in between the Bollinger Bands reflects the market activity. If the market is range bound the bands will be narrow and compressed reflecting little fluctuation in the market. If the market is trending the bands will be undulating, with the area in between expanding or contracting according to the direction of the market activity.
Bollinger bands can be used with candlesticks to predict whether the price of a currency will go long or go short If a candlestick reaches the top of a Bollinger Band in a range bound market a fair assumption to make is that the trade will then go short, similarly if the candlestick reaches the bottom of a Bollinger band it is safe to assume that the trade will then go long. However it is important to remember when working with narrow margins, such as a range bound market it is more difficult to predict changes than in a trending market.
When looking at a trending market the Bollinger bands will undulate to reflect new currency prices. Often the bands will dip, then return to the same point then dip again a bit like a roller coaster, sometimes when this happens we can see two peaks of resistance with a dip in between. If a candlestick broke through these peaks of resistance and traded above the Bollinger band it would indicate that the currency pair is going long. If the candlestick did the opposite and traded below the bottom most points of the roller-coaster shaped Bollinger bands it would indicate that a currency pair was going short.
Candlesticks reflecting the currency pairs fall within the lines of the Bollinger bands approximately 95% of the time. Occasionally candlesticks may appear outside of the bands. When the candlesticks do fall outside of the bands it is an indication of extreme activities in the market and a possibility that the current trend may change. Candlesticks are most likely to fall outside the Bollinger Bands when the market is range bound but can occasionally occur in a trending market as described earlier in this module. When the area between the bands is greater there is less likelihood of the candlesticks falling outside of the bands. When looking for a possible change in a market look for narrow, compressed bands in a range bound market, as these bands then start to widen or expand a change in the market is signified.
It is important to remember that Bollinger Bands like all methods of interpreting market activity are not infallible. Sometimes a candlestick may break the Bollinger band and rise above the resistance point, indicating a market that is going long, but then suddenly plummet and go short instead. The best way to avoid being caught by the possibility of this is to use stop orders as mentioned in module one of this course. To ensure profit is locked in and you are not caught out by a suddenly falling market it is a possibility to initiate a sell order at the same point as your stop order, changing your trade from a long trade to a short trade.


http://www.financial-spread-betting....ger-bands.html

Bollinger Band Width And Trading Ranges

Written by Thomas Long

The market enjoys two basic trading conditions which tend to repeat on a very regular basis; range bound and trending states. As buyers and sellers establish the extreme overbought and oversold regions, these two opposing forces begin to approach one another, and a trading range develops as relative support and resistance levels begin to approach one another. This phenomenon often times takes the shape of a triangle consolidation pattern. Eventually either the buying or selling side takes control, forcing the opposition into submission as a new trend develops and as the market trades at new highs or lows. Once this trend exhausts itself and the market fails to accomplish new highs or lows, a new range will now develop.
As the market continues to cycle between trending and ranging conditions the Bollinger Bands will continue to expand and contract based on its relative states of volatility. During trending markets the Bollinger Band Width indicator tends to rise as the bands that it measures expand away from each other. On the same note, when a range bound condition ensues the Bollinger Band Width line tends to fall as the bands contract once again towards one another. Although there may not be a notional value to gauge low or high extremes of the Bollinger Band Width line, we can approximate the ultimate high and low points by simply noting recent trading activity on the chart. More importantly we should note the direction of the Width line, as it falls after visiting extreme highs, or rises after touching extreme lows.
Now the question remains, how can we use this in our day to day trading operations? Very simply, we can see the following 2-hour chart, the GBP/USD has formed and subsequently broken out of a number of triangle patterns as the Bollinger Band Width line rises and falls respectively. As a triangle develops, we may choose to go long near support and sell short near resistance, and we may continue to do so profitably until the Width line falls to an extreme low, and then reverses to the upside.

http://www.aboutcurrency.com/images/...ing_Ranges.gif

On the same note, in a trending market, we may choose to buy new highs, or sell new lows until the Width line touches an extreme high, and then reverses to the downside. Although the notional value of the Width line is important to note, the current direction of this line may be more helpful in showing us the future implied state of volatility and therefore dictate the next trade in our near future. Note how each triangle finally breaks into a new trend just as the Width line reaches an extreme low and reverses to the upside (circled below). This is typically considered the inflection point where a range becomes a trend and our view on the market must change accordingly.


http://www.aboutcurrency.com/article...g_ranges.shtml

How To Use Bollinger Bands (BB) In Forex

Bollinger Bands (BB), developed by John Bollinger is referred to as an trend following indicator. The main purpose of Bollinger Bands is to determine of whether the currency market is trending, ranging or about to breakout of the trading range. The bands themselves act as support and resistance levels.

Bollinger Bands are composed of three bands, the middle, the lower and the upper band.

Middle band: 20 period simple moving average (default)
Upper band: Middle BB + 2 x 20 period standard deviations
Lower band: Middle BB - 2 x 20 period standard deviations

USD/JPY Bollinger Bands (BB) Hourly Chart

http://www.fxtsp.com/images/stories/...-indicator.gif

Type of technical indicator: Trend Following

Why are Bollinger Bands useful in forex trading?

A. 75% of the year currency pairs move between the upper and lower bands.
B. BB are useful to determine whether we are in a range or in a trend.
C. They give you some powerful insights into market volatility >> Wide bands indicate high volatilty. Narrow bands indicate low volatility.
D. If the bands are really tight, expect a currency pair to breakout sooner or later since low volume creates small range and large trading volumes could push the pair heavily in one direction.

http://www.fxtsp.com/images/stories/...-indicator.gif

Forex signals from Bollinger Bands

Trending Markets : Bands are sloping up or down.

In down trending markets (bands are sloping down), look for shorts in the vicinity of upper Bollinger Band. Avoid long trades.

In up trending markets (bands are sloping up), look for longs in the vicinity of the lower Bollinger Band. Avoid short trades.

Range Bound Markets: Bands are aligned horizontally.

Look to go short at the upper BB.
Look to go long at the lower BB.

http://www.fxtsp.com/education/techn...in-forex-.html

Basic Bollinger System
November 22, 2010 By Raj

Basic Bollinger System:
The Basic Bollinger System is a forex trading strategy that is used in range-bound markets. Range-bound markets typically exist when the market is waiting for direction from a major Economic News item coming out from a one of the major forex currency countries. There are also some currency pairs that are typically range-bound, such as the EURGBP currency pair.

Time Frame: 1hr and 4hr charts. Higher time frames provide greater accuracy (though the signal does not come so often in higher time charts).

Indicators:

 

1. Bollinger Bands (default settings)
2. Stochastic Oscillator (fast and slow, set at 10,3,3)
3. Auto pivot point calculator software (a custom indicator) to plot the pivot points, support and resistance levels. This is optional.

BUY SETUP:
Go LONG when the candlestick in view closes and touches, or cuts the lower Bollinger band, and the Stochastic cross upwards at or below 25. Place a MARKET BUY order at the open of the next candle. The signal is reinforced if the market is at a support level (hence the use of the Auto pivot software to plot the support and resistance lines).

http://www.forexbees.com/wp-content/...al-500x274.gifBollinger Bands Strategy - Buy Signal

SELL SETUP:
Go SHORT when the candlestick in view closes and touches or cuts the upper Bollinger band, and the stochastic oscillator cross downwards at or above 75. Place a MARKET SELL order at the open of the next candle. The signal is strengthened if the market is presently at a resistance level.

http://www.forexbees.com/wp-content/...al-500x274.gif
Bollinger Bands Strategy - Sell Signal

EXIT STRATEGY:
For LONG orders, place a Stop Loss (SL) about 30 pips below entry, and place a Take Profit (TP) at the middle Bollinger, or allow the market to edge up 10 pips above the middle Bollinger and apply a Trailing Stop (TS) to follow the market.
For SHORT orders, place a Stop Loss (SL) about 30 pips above entry, and place a Take Profit (TP) at the middle Bollinger, or allow the market to edge down 10 pips below the middle Bollinger and apply a Trailing Stop (TS) to follow the market.

Precaution:
The candles in view (the one being watched to close and touch or cut the respective Bollinger bands must first close and the Stochastic must cross at the same time as described above. Only open positions when the next candle opens. This is why it is best to apply this strategy in higher time frames (as from 4 hours for greater accuracy).

http://www.forexbees.com/basic-bollinger-system/