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My Trading Strategy with Moving Averages Tunnel and RSI (Forex Education).

Hi guys,

Here is one more trading strategy. Like many traders say good system is simple one an that's why I will show you a very simple one.

You need

- 1h chart<br> - 18 EMA (in red)<br> - 28 EMA (in red)<br> - 5 WMA (in blue)<br> - 12 WMA (in yellow)<br> - RSI 21

<h3>Trend recognition</h3>

The 18 and the28 EMA are two red lines who form a tunnel together; these will help you to determine the start of a trend and the end of a trend.

<h3>Long term</h3>

The 5 and the 12 WMA will show you when to enter in a trend; they will also help you to see the strength of the trends.

<h3>Entry Signals</h3>

You should only open a position, when the red tunnel is extremely narrow or crossed!

<h3>LONG</h3>

5 and 12 WMA cross the red tunnel upwards. If the 5 WMA also crosses the 12 WMA upwards, then the signal is extra strong. RSI >50

<h3>SHORT</h3>

5 and 12 WMA cross the red tunnel downwards. If the 5 WMA also crosses the 12 WMA downwards, then the signal is extra strong. RSI<50

<h3>Exit</h3>

Signals that show the end of the chosen trend:<br> <strong>Long:</strong>

The price has reached a top and 5 WMA dives under 12 WMA --> Close position

<strong>Short:</strong>

The price has reached a bottom and 5 WMA jumps above 12 WMA --> Close position

<img id="15366" class="imgNone" src="http://img.ibtimes.com/www/data/articles/full/2010/07/30/15366.png" alt="" width="598" />

<img id="15367" class="imgNone" src="http://img.ibtimes.com/www/data/articles/full/2010/07/30/15367.png" alt="" width="598" />

Always close your position when boundaries of the red tunnel cross each other or when they become so narrow that they are one! This is a clear sign of a trend reversal. After you see this, close your position and open a new position in the other way (If you were long, close, open a short position).

When in a trade and the 5 and the 12 WMA cross the red tunnel &agrave; pay attention! As long as the red tunnel boundaries doesn't cross each other there is no problem, but often this is a sign that they will!

Good luck trading!

Best regards,

Roger

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Publication:International Business Times - US ed.
Date:Jul 30, 2010
Words:398
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