ComplexForex Trading Systemis a trend momentum price action strategy.Overview
MarketsTraded – Forex, only the GBP/USD
Charts – 4 Hour, 15 Minute, 5Minute and 1 Minute
Indicators
SMA set at 21
EMA also set at21
Stochastic set at 9, 3, 3
MACD – 12,26,9
BollingerBands set at 20 with standard deviation of 2
Trendlines
Supportand resistanceDescription
Tradesany timeframe but concentrates on the 4 Hour, 15 Minute, 5 Minute and1 Minute charts. He looks for the same set up on each time frame. Inother words, he uses the same rules to trade all time frames. Hescans the chart to look for his set up on his favorite time framesand then trades that time frame.
Setup
Thefirst thing to do is setup your charts. First adds a 21 periodSimple Moving Average and a 21 period Exponential Moving Average. Hethen adds the Stochastic Indicator set to 9, 3, 3. Next he adds theMACD indicator with defaultsetting of 12, 26, 9 and finally he addsBollinger Bands set at 20 with a standard deviation of 2.
I usessupport, resistance, trendlines and pivot points (his own)extensively. The whole method is based on taking action around theseareas. to trade within a range. The range is defined by Obiliza asthe price action in a given period. For example, if you look at thechart 1.0 below, the highest and lowest points that can be seen in anormal view is This applies to all time frames. He is looking forthe highest and lowest point in the last few trading days. First hemarks the lowest and highest (points) support and resistance levelsthat he can see. It’s a little hard to see on this chart but theresistance level is 1.4977 and the support level is 1.4474.
Thismeans the range is 1.4977 – 1.4474 = 0.0503 pips. This gives us arange of 0.0503 pips. To get his pivot point, he divides the rangeinto two, basically drawing a line in the middle of the support andresistance levels. Half of the range 0.0503 is 0.0251 (rounded). Take0.0251 from the resistance level. 1.4977 – 0.0 251 = 1.4726 Youcan see the Pivot Level in chart 2 , which is half way between theresistance and support.
Nexthe wants to define a “zone” of support and resistance and he getsthis by using thetechnique To get the zone, first change the chart toa line chart and draw in the support and resistance as in chart 3.You can see the new lines marked in red.
Chart 3 (Without Bollinger Bands)
This is the same chart with theBollinger Bands and candlesticks back on.
Nexthe adds his trendlines as in chart
Nexthe adds a further two lines which are calculated by halving thedistance from the pivot point to the first resistance line andhalving the distance from the pivot point to the first supportline.
Resistance 2 is calculated by taking the first resistancepoint of 1.4997 and subtracting the pivot point of 1.4726, whichequals 0.0271 pips. Divide 0.0271 by two to get 0.0135. Now subtract0.0135 from 1.4997 and you get 1.4862. To get support 2, take thepivot point of 1.4726 and subtract the support of 1.4474, which givesyou 0.0252. Now divide 0.0252 by two to get 0.0126. Now take 0.0126from 1.4726 to get 1.4600. See chart
SYSTEMRULES
Short Trades1.Look for a cross of the moving averages near one of our resistancelines
(point 1 on chart 2.0).
2. The stochastic should havecrossed down (point 2 on chart 2.0)
3. MACD should have crosseddown or already be in sell (point 3 on chart 2.0).
4. Entry is 5pips below the support line or the trend line
5. Stop loss is 15pips above the nearest resistance or trendline.
6. Target is thenearest support line.
A perfect trade would be when the markethits resistance and price is near the top Bollinger band as the twomoving averages cross. At the same time, the stochastic and MACDcross and you get a break of the trendline. It’s like a confluenceof things happening at the same time.
LongTrades1.Lookfor a cross of the moving averages near one of our resistancelines.
2. The stochastic should have crossed up.
3. MACD shouldhave crossed up or already be in buy.
4Entry is 5 pips above support line or trend line
5. Stop loss is15 pips below the nearest resistance or trendline.
6 Target is thenearest resistance line.
A perfect trade would be when the markethits support and price is near the lower Bollinger band as the twomoving averages cross. At the same time, the stochastic and MACDcross and you get a break of the trendline. It’s like a confluenceof things happening at the same time Let’s look at a few examples:The following example is a perfect Sell setup (Obiliza’s charts).Have a look at the dashed dark blue line on the following chart atPoint 1. The Blue 21 SMA crosses below the White 21 EMA. Just priorto that, the Blue SSD line has crossed below the Orange SSD line atPoint 2.
At Point 3 the Red MACD line crosses below the Blue MACDline. Next, I placed my entry order 5 pips below the blue resistanceline and set my target level 40 pips below the entry level. Thetarget of 40 pips was easily achieved.
15Minute GBP/USD Chart.
We’vetaken the highest and lowest points that can be seen in a normal viewas the range and then divided it to get the Pivot line. Our sell orbuy point will be either 5 pips above or below the Pivot line. Pricefirst moved below the Pivot line giving us a signal to Sell. The BlueSSD line has crossed below the Orange SSD line and the Red MACD linecrossed below the Blue MACD line which confirmed the Sell signal. Ithen placed my entry order 5 pips below the Pivot line. I placed mystop loss 15 pips above the upper trendline and my Target Limit atthe nearest Support line.
As you can see, the target was easilyachieved and not long after there was aBuysignal when price moved back over the Pivot line.
MoreExamples
The Blue SSD line crossed above the Orange SSD line andthe Red MACD line crossed above the Blue MACD line which confirmedthe Buy signal, so I placed an entry order 5 pips above the Pivotline. I placed my stop loss 15 pips below the lower trendline and myTarget Limit at the nearest Resistance line. The Target Limit wasreached not long after that.
