22# Channel MA Reversal Breakout, MT4 Mobile Strategy

Submit by Joy22

This strategy, known as the Channel MA Reversal Breakout, is designed to help you make informed trading decisions with a high probability of success. Let's dive into the setup and rules for this strategy, and review some practical examples with the provided images.

Strategy Setup

Time Frame: 5 minutes or higher
Currency Pairs: Any
Indicators

1. Bollinger Bands (BB): Period 21, Deviation 2.0

2. Relative Strength Index (RSI): 14 periods with Simple Moving Average (SMA) of 14 periods

3. Simple Moving Averages (SMA):

   • SMA 4 periods, high

   • SMA 4 periods, low

Trading Rules

Buy Signal:

1. Bollinger Bands Interaction: when the price touches or goes below the lower Bollinger Band and then moves back above it.

2. SMA Crossover: the price closes above the 4-period SMA (high).

3. RSI Crossover: RSI crosses above its 14-period SMA from below.

Sell Signal:

1. Bollinger Bands Interaction: when the price touches or goes above the upper Bollinger Band and then moves back below it.

2. SMA Crossover: the price closes below the 4-period SMA (low).

3. RSI Crossover: RSI crosses below its 14-period SMA from above.

Exit Rules:

• Stop Loss: Place stop loss below/above the upper/lower bands.

• Profit Target: Set the profit target at the middle line of the Bollinger Bands or use a risk/reward ratio of 1:1.5.

Image Analysis and Commentary

Image 1: Initial Setup and Buy Signal Confirmation

In the first image, we observe the price action on the NZD/USD 15-minute chart. Here are the key points:

• The price touches and moves back above the lower Bollinger Band.

• The RSI crosses above its 14-period SMA, indicating a potential buy signal.

• The price closes above the 4-period SMA (high), confirming the buy entry.

Image 2: Mid-Trend Observation

The second image continues from the first, showing the price movement:

• The price continues to rise after the initial buy signal.

• The RSI remains above its 14-period SMA, confirming the ongoing bullish momentum.

• The Bollinger Bands expand, indicating increased volatility and a strong trend.

Practical Application

To apply this strategy effectively, follow these steps:

1. Monitor Price Action: Keep an eye on the interaction between the price and the Bollinger Bands.

    

2. Breakout Channel SMA: wait for the price to close above or below the 4-period SMA to confirm your entry.

3. Check RSI Movement: ensure the RSI crosses above or below its SMA to confirm the signal.

4. Set Stops and Targets: Place your stop loss according to the Bollinger Bands and set a realistic profit target.

Conclusion

The Channel MA Reversal Breakout strategy is a powerful tool for traders using the MT4 mobile platform but is good also for other platforas MT, MT5 TradingView. By combining Bollinger Bands, RSI, and SMAs, this strategy helps you identify high-probability trading opportunities with clear entry and exit rules for both Forex and binary options trading. Remember to backtest this strategy on a demo account before applying it to live trading.

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