Trend Trading with HTF Momentum and Relative Strength

I have coded various indicators recently and in the process I have come up with some interesting ideas regarding how to increase the probability of your trend trades. A friend of mine is big on relative strength so I coded a few indicators for him and then it struck me to code an indicator that would tell you when the higher timeframes were all trending in the same direction. In the last few days I have come up with a set of indicators that tells you both in one place.

I have attached screenshots of the dashboad indicator and also a chart with the other indicator on. You will notice I have my trailing stop ea attached which is available on my other threads. Also I have a money management indicator which tells me the lot size to use to risk a certain percentage over a certain number of pips. That is available on forex factory too.

The trade explorer is not showing the correct balance or any trades at the moment as I am yet to close a trade. As soon as a trade closes I will reactivate the explorer and make sure it starts with the correct balance.

I am long nzdchf at the moment. Not much happening before NFP. I'll update later.

Nzdchf moving up ok. I'm long nzdjpy and audusd now too, both trading at support.

Nzdjpy knocked out for a small loss but the others are doing ok. It will probably be Monday now before anything happens.

Hugh,

Great minds think alike.

I likewise pair strong v weak to maximize the probability of catching the strongest, cleanest trends, and avoid periods of sideways movement (the enemy of trend trading). I prefer H4 upward as macroeconomic factors tend to generate longer lasting trends. Then use S/R and OB/OS on lower TFs to create low risk entries (I'm a big fan of millipede and infinite yield).

Good luck with your thread, and your site. I've signed up to the latter (as 'hanover'), as I'd like to keep an eye on developments.

All the best,
David

Hello David, thanks for taking the time to post. I haven't seen your version before and it looks very clean. My original relative strength indicator came about when I started learning how to code and a friend requested that I looked into doing it for him. My current version combines higher timeframe momentum with relative strength by only looking at strong/weak pairs that are moving in the same general direction on 3 higher timeframes (I use monthly, weekly and daily but the indie is customisable). I have found it to be quite reliable so far but time will tell. I also like equity millipede but I haven't heard of infinite yield so I will definitely take a look.

Good to have you onboard on the site, see you over there.

For a while now Aud and Nzd have been showing as strong on the higher timeframes relative strength. Last week eur, gbp and chf were quite strong towards the start of the week but weakened off whereas cad was weak at the start and picked up on Friday. Without a doubt the weakest currency recently has been jpy, flying up the page against all other currencies but quite choppy, as the Yen tends to trade.

For the start of next week then I will be concentrating primarily on Aud and Nzd pairs, particularly against the Yen but open to suggestions. Usd has been weakening off a little recently so Audusd and Nzdusd will be of interest.

I am long Audusd and Nzdchf from last week and had a loser on Nzdjpy on Friday just after nfp. I will look to buy into uptrends on these pairs, get to break even and leave them alone for a bit, see what happens.

I will go through the charts this evening before the market opens and identify any strong s/r levels we should be aware of and I will post the charts here.

Here are some indicator screen shots and charts. We can see from the two strength/momentum indicators that aud and nzd are pretty strong on the higher timeframes, this might change but I will keep a close eye. For the meantime I will be buying these two currencies.

There are some important resistance areas looming on Nzd pairs so we need to watch those carefully. In general a move away from those should provide another buying opportunity with the anticipation that these levels will break in the face of strong momentum. If they break straight away then a pullback to those levels will provide another good buying opportunity. Of course if the resistance holds then no trades will be considered until the picture becomes more clear.

Audchf is coming up to the 100 sma on the daily which can act as resistance but if you look at the daily chart there is a clear trendline broken. The hold on the 4 hour chart of the upside looks fairly smooth too. This could lead to higher prices this week, long trades are valid at this point in time.

The s/r picture on Audjpy is not so clear but 86.25 appears to be acting as support and looks nice on the 4 hour chart.

I can't see much in the way of Audusd reaching 1.06. It's in an upwards channel on the daily but also on the 4 hour/hourly too.

Nzdchf is giving a similar picture to Audchf although possibly not as clear.

Nzdjpy is meeting very clear resistance at 69.00. The pic attached is a weekly chart. A break of that level should be very significant.

Nzdusd is meeting strong resistance too at 83.50. The 83.00 level could well provide some support to buy from on a pullback.

Remember that this situation is open to change. If these pairs start moving against the overall trend and the strength/weakness changes then this analysis is less useful. Let's see what the week brings.

More charts.

A bit of an up and down week so far but got some nice positions open now. I'm going to let these run and see how far they get.

A bit of a helping hand from the FOMC there. 9 trades now at break even. I'm going to let these run as far as I can, I am fully expecting some to be stopped out at break even but I will continue to take trades with the trend and build up positions. If you throw enough mud some of it will stick.

The trouble with trading pullbacks in the trend is if it doesn't pullback you can't get on! Mind you this is a nice problem to have when you're already on a few good trades. Nzdjpy is blazing a trail at the moment, that 69 level breaking is really significant.

I lost a few trades yesterday evening at break even but still got 7 good trades at break even and 2 others. Hopefully I can get a few more established today.

Just opened a few more trades, looks like things could be turning round.

15 trades at break even going into the weekend. Let's see where we go next week.

Here is the state play at the close. Obviously the spreads will be a bit wider at the moment but it's looking ok. 30% in just over a week if I close it all out. I may not be taking any trades until the start of the new year now, we're coming into a traditionally quiet time of the year. The markets will move but may be a bit choppy. Hopefully these trends will continue and I can add some more positions at the start of next year.

I've started a new thread that better describes my approach after a few refinements. The link is below.

http://www.forexfactory.com/showthre...31#post6297631