20 Pips Price Range Moving Average Forex Strategy
The 20 pips price range moving average strategy is used with the 1 Hour and 15 minute Trading charts. On this chart time-frames we use the 100 and 200 simple moving average indicator.
Both the 1 Hour and 15 minute chart time-frames will use the 100 and 200 SMA (SMA Indicator) to determine the direction of the Forex trend.
The 1 Hour chart time-frame checks the long term direction of the Forex trend, upward or downward trend, depending on the direction of the moving averages. All trades taken should be in this direction.
We then use the 15 minute price chart to find the optimal point to enter trades. Trades are opened only when the price is within 20 pips range of the 200 simple MA, if price is not within this pip range trades are not opened.
Buy Signal - Forex Uptrend/Bullish Market
To generate buy (bullish signals) using the 20 pips moving average Forex strategy, we shall use the 1hour and 15 minute chart time-frame.
On the 1 hour chart time-frame the price of the currency pair should be above both the 100 and 200 simple moving average. We then move to a lower chart time-frame, the 15 minute chart time-frame to generate a trade signal.
On 15 minute chart time-frame, when price reaches the 20 pips range above the 200 SMA, we open a buy trade and place a stop loss 30 pips below the 200 SMA. Stop loss can be adjusted to the amount of Pips that are suitable for your risk but to avoid being stopped out by normal Forex volatility its best to use 30 pips stop loss.
A buy trade can also be opened when price touches the 100 Simple moving average, provided it’s not very far from the 200 SMA. Normally the 100 SMA will be within the 20 pips range of the 200 SMA.
100 and 200 Simple Moving Average Buy Signal
Sell Signal – Forex Downtrend/Bearish Market
To generate sell (short signals) using the 20 pips moving average Forex strategy, we shall also use the 1hour and 15 minute chart time-frame.
On the 1 hour chart time-frame, the price should be below both the 100 and 200 SMA. We then move to the 15 minute chart time-frame to generate a Trading Signal.
On 15 minute chart, when price reaches the 20 pips range below the 200 SMA, we open a sell trade and place a stop loss 30 pips above the 200 simple moving average.
100 and 200 simple Moving Average Sell Signal
With this method price will generally bounce of these levels because many traders watch these levels, and open similar trades at around the same point.
These levels act as short term resistance or support levels within the currency price charts.
Profit Taking level For This Trading Strategy
With this trading strategy the price will bounce and make a move in the direction of the original Forex trend. This move will range from 60 - 70 pips.
The best profit taking level would therefore be considered to be 80 pips from the 200 SMA.