20 Pips Price Range Moving Average Forex Trading Strategy
The 20 pips price range moving average forex trading strategy is used with the 1 Hour forex chart and 15 minute forex chart. On this forex chart time-frames we use the 100 and 200 simple moving average forex technical indicator.
Both the 1 Hour and 15 minute forex chart time-frames will use the 100 and 200 SMA (SMA Indicator) to determine the direction of the Forex trend.
The 1 Hour forex 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 forex trades taken should be in this trend direction.
We then use the 15 minute forex chart to find the optimal point to enter forex trades. Forex 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 forex trades are not opened.
Buy Signal - Forex Uptrend/Bullish Market
To generate buy (bullish forex trading signals) using the 20 pips moving average Forex strategy, we shall use the 1hour and 15 minute forex chart time-frame.
On the 1 hour forex chart time-frame the price of the forex chart should be above both the 100 and 200 simple moving average. We then move to a lower forex chart time-frame, the 15 minute chart time-frame to generate a forex trade signal.
On 15 minute forex chart time-frame, when price reaches the 20 pips range above the 200 SMA, we open a buy forex 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 forex trade can also be opened when the forex 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 Forex Trading Buy Signal - Moving Average Forex Strategy
Sell Signal – Forex Downtrend/Bearish Market
To generate sell (short forex trading signals) using the 20 pips moving average Forex strategy, we shall also use the 1 hour forex chart time frame and 15 minute forex chart time-frame.
On the 1 hour forex chart time-frame, the price should be below both the 100 and 200 SMA. We then move to the 15 minute forex chart time-frame to generate a forex trading Signal.
On 15 minute forex 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 Forex Trading Sell Signal - Moving Average Forex Strategy
With this forex trading strategy method price will generally bounce of these support and resistance levels because many forex traders watch these levels, and open similar forex trades at around the same point.
These support and resistance levels act as short term resistance or support levels within the forex price charts.
Profit Taking level For This Forex Trading Strategy
With this forex 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 forex trading profit taking level would therefore be considered to be 60 to 70 pips from the 200 SMA.