1H Swing Trading on EURUSD

/!\ SYSTEM ON PAUSE FROM MAY 2023 TILL FURTHER NOTICE /!\
One Hour Trend Trading System on EURUSD

One picture being better than one thousand words...

Attached Image (click to enlarge)

These are the first seven trends of 2020 as of Begin of March 2020.

The system uses a Simple Moving Average (SMA) coupled with a Stochastic RSI (SRSI) calculated over a period of 96 hours to signal trends like shown in the chart above. It does so when the price is above SMA and SRSI is above 40 for a bull trend or when price is below SMA and SRSI below 60 for a bear trend.

Once a new trend begins, it's important to draw the corresponding trend line in the following hours or days. Trends are used to avoid false entries, which can exist when a new trend is signaled without the previous trend line being broken or to confirm them when they are broken.

This system has been created and adjusted for EURUSD only and occasionally EURJPY. No other pair will be traded, discussed here.

The entry is simply when a new trend appears, the exit is at your own discretion but the last call is when a contrary signal (opposite trend) appears.

Please note that Money management, Risk, SL, etc will not be discussed here as everyone is responsible for the risk (s)he can afford.

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Before posting, please consider the following :

1. Before posting anything, please, at least read the first 10 pages of the thread, any question coming later that was already answered in those first 10 pages, will simply be ignored.
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2. Please be polite and respectful to everyone like we all are in real life.
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3. Please don't post charts or other material not related with the system or of different pairs.
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4. Please don't add your own rules and/or indicators to the system.

Know that the non respect of these rules can ban you from the thread.

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That's all for the description and rules. If you want to give it a try, I would be glad to hear from, or help you if needed.

PS. Posts #2 to #178 show the original system when SMA and SRSI were charted separately. The actual system merges both indicators into one shown on the price window, it tests the condition of a new trend and changes the SMA and fill color between SMA and price when it detects one.

Note also that I was using SMA-100 at the beginning and this was then changed later to SMA-96, so don't get confused if you see in the earlier posts SMA-100, it's SMA-96 that is used now.

Latest versions of Indicators for MT4 :

Latest versions of Indicators for Trading View :

Upgraded 2021 version which removes a bit of noise.

Now, let's see what are the charts I look at...



This is 1H EURUSD chart printed right now at 14h41 CET

You see the MA100 on the chart and MyStochRSI below it.

The first signal letters for example " A " are followed by confirmation signal letters, like for example " A' "

One interesting thing to note in E and E' is how MySRSI went down well before the price.

Another interesting thing to note is how the market pulls back about 20 pips after each signal giving you an opportunity for a better or more conservative entry.

But note that this could not always be the case and that in conditions of more volatility, the pullback could be wider...

Look at the green " O " in the chart ...

Probably an hidden divergence :-)

Your MyStochRSI is it the original indicator stochastic and rsi together ? i ask it, to get it on my platform ? :-)
thx
and good luck for your system :-)

Yes it was, just wanted to keep things simple, I don't want myself looking for divergences, instead see them as a whistle-blower ;-)

Yes, it's stochastic and rsi, took it somewhere and modified it to my needs.

Thanks and good luck to you too!

Time to get a look on the dark side and see what could happen during a flat market.

This is the EURUSD 1H chart of last September explained.




AA' was a good BUY signal without pullback opportunity but soon markets flattens and gives a BB' SELL signal.
For these 2 signals I think we can be out without too much losses and with eventually a small gain.

Now comes CC' buy signal with a strong reversion of price (news here) which forces us to close our previous BB' sell with a loss. Yes a loss, but remember, losses are OK as long as trading is conservative with MM kept in check.

And then comes DD' Sell signal which make us close previous trace certainly at a loss. We are at mid-month and at this point it would be good to make a pause in trading and observe the market.

Now, look after D, how MSRSI never went below 40 and up, which would have generated a buy signal. And also look at price not making any new high and more than that making a new Low marked "L" and this confirms that DD' was a valid signal and that we are now out of that trading range.

Now E could have been taken for an early Buy signal but there was no MA100 cross to validate it so if we were short we remain short until next buy signal FF'

You see, flat markets are and will always be difficult to trade and you never know when you enter one, so be conservative. In addition of MA100 crossings and MyRSI values, observe whether the price is making new highs or new lows, the general direction of MYSRSI gives also an hint.

I think the keywords when guessing that we enter a flat market are prudence, observation and patience.

As extra confirmation and last tool, you can add trend lines to confirm the signal validity. It's good to do so when MYSRSI approaches 40 or 60 future signal.




That's all for now, until the next if you have any question or for a live trade!

I want to post two interesting cases that took place in February of this year, this is to have some reference posts when in doubt in future trades.



I emphasize here the usage of the trend line of the previous ending trend in order to not enter too early and confirm termination of previous trend.

AA' gives a valid Buy Signal but look at how the trend line established by L1 L2 doesn't get broken and it evens reject the price forming L3 and suggesting that the previous down trend should continue.

Observe also that the swing to generate the Buy signal is 80 pips large and very often, if not all the time, top and bottoms are tested as it was in this case and that means that in the case we had entered a trade here, we would have been in 80 pip loss and in this case we went even lower than that so it's important to be aware of that.

Finally the trend gets broken at the X point, confirming the long trade.

On the following long trend, we get an early B Sell signal without no MA 100 cross, so no sell or close of previous trade here, instead this is the right time to draw a trend line using support points going back, those are N1 and N2.

Later we get another C Sell signal, this time confirmed by C' and also by the trend line getting broken.
In addition we have an O(pportunity) signal 50 pips away ! Which is quite a lot but which allows you to double your position if your first entry was conservative.

More charting...



Observe all the MA 100 crosses which are just False breakouts (FBs) as long as MSRSI doesn't cross the 60 line !
That's why the two indicator signal confirmation is important, and trend break confirmation, a Nice to Have !

Sometimes, trading by the rules will not be enough but at least that shouldn't sink the account either.
Observing and judging from the big picture will always be important.



Getting all the trades during July and begin of August, we would have made a total of -80 pips !
Emphasizing that this system being good, it's still has periods where it just won't work, so take care of it and keep an eye on the overall picture.

The issue is to understand what's going on, it's always difficult and sometimes only possible after the fact.

Here we see clearly a trading range between the two dotted lines, we could only have seen it at point C, not before ! At that point it's interesting to look at the MSRSI shape and note that the peaks A' B' and C' were weaker and weaker, certainly an early indication that the range would be broken to the low ? Well we got a DD' Sell signal right after anyway ;-)

hello I could publish the parameters of the indicators for MT4

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Please do. Thanks

Current situation...



Interesting to see how L1 L2 trend-line was broken at L3 just to see the price rejected by the MA100 creating a false break.
Note that at the moment of breaking the trend line, neither MSRSI nor MA100 were giving a signal.

I will be moving my trend line to L1 L3 after this, I think we are near a buy signal or the continuation of current trend if support is broken...

As you suggested, I have plotted the 84 EMA on the chart and I see that it produces similar results. A bit earlier signals due to its 'E' component and of course the smaller period.

So thanks for the suggestion but I will stay with my MA 100. I think that the longer period and simpler calculation gives it more detachment from current price fluctuations (noise) and overall is simpler than the EMA, and I always look for simplicity.

Hi,

Any clue on how to get that indicator under Mt4 ?

Thanks !

You have it here :
https://www.mql5.com/en/market/produ...tab_p_overview

Use these parameters:

Thanks for that !

I want now to reveal my plan for the next trades.

As you can see in my explorer, I have already a long trade running which was in anticipation of what's happening now. I sometimes enter a trade when a recent low is tested, sometimes that works, sometimes not.

Now you see in the chart below that we are near a new Buy signal. The trend line has already been broken, the MA100 will soon maybe be broken and MSRSI is also approaching 40, so as I have already a trade running, I won't enter on the signal, instead, I will wait for a pullback (Opportunity, maybe near or at the trend-line), if there is one, after what if the price goes back up, I will enter again when reaching a new high which for me would mean that we entered a new up trend, if all this realizes, I would have a triple position.