Forex Strategy «50% of the previous candle» is very simple, but effective enough in the time interval of H1 for the currency pair GBPJPY (although it is possible to use it on other highly volatile currency pairs).
To use the strategy we need the following forex indicators:
- Stochastic with parameters (5,3,3) and will need to set the overbought and oversold levels (25 and 75)
- and indicator RSI (7), with levels 30 and 70
Open Trade:
To open a transaction, you need to look at forex indicators Stochastic and RSI and to determine where the price can break through.
If the graph is observed upward trend indicators Stochactic and RSI are in overbought zone, and suddenly we are seeing a downward candle (black candlestick), the closing price which is at least in the middle of the previous candle, and if possible more, and quite well, if the body new candle will absorb the previous (in this case white), open a trading position. Remember: the body of the current candle should cover the body of the previous minimum of 50%, or preferably more!
So the deal: sell as soon as the RSI and Stochastic indicators are overbought or are close to the overbought zone (75), and only after we waited for the closure of the candles, which had been closed for at least the middle of the previous hour or more candles!
Conclude a deal to buy as soon as the RSI and Stoch indicators are in oversold territory and closed upward candle, which covers the body of the previous candle At least in the middle of the previous or more!
Exit the trade position is made in obtaining the reverse trade signal or stop-loss orders, which must stationed at a minimum or a maximum of 2 previous candles, ie a local minimum or over a local maximum.
