This set-up is a bit more aggressive, it is harder to spot but it can be very profitable when traded.
Step 1: Find a Resistance\Support level
It should be a level that price has touched before and reversed:
Step 2: Make sure the Moving Average is Flat
The 20-period Moving Average must be flat for the set-up to be confirmed. (the middle band of Bollinger)
Step 3: Wait for price to touch the level again
Step 3: Wait for price to touch the level again
Wait for price to touch the level again, AND to be close to the Bollinger Band. For long trades price should be closer to the lower band, and for short trades price should be closer to the higher band.
Reversal is confirmed when price goes above the high of the previous candle (for long trades) or below the low of the previous candle (for short trades).
Reversal is confirmed when price goes above the high of the previous candle (for long trades) or below the low of the previous candle (for short trades).
Step 4: Placing Stop Loss
Stop Loss is placed:
- 5 pips below the lowest low of last 4 candles (for long trades)
- 5 pips above the highest high of last 4 candles (for short trades)
Trade is closed when price touches the opposite Bollinger Band.
2 comments:
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