76# FX Money Bounce Forex Strategy

Submit by Dimitri 2025 author Russ Horn

The FX Money Bounce system is a trend-following strategy that capitalizes on momentum by taking trades in the direction of the prevailing trend. This approach uses moving averages and a Price Oscillator to set up and confirm trades. Here are the main components, rules, and conditions for the strategy.

Key Components

Moving Averages:
- 20 EMA (Lime Green)
- 50 EMA (Orange)
- 100 EMA (Red)
- The order of these moving averages is critical. For a trend to be confirmed:
  - Ascending order for long trades: 20 EMA above 50 EMA, which is above 100 EMA.
  - Descending order for short trades: 100 EMA above 50 EMA, which is above 20 EMA.
Price Oscillator:
- A histogram showing the relationship between two moving averages (5 EMA and 13 EMA).
- Green bar indicates a potential buy signal.
- Red bar indicates a potential sell signal.
- Note: The oscillator’s color only gives potential signals and needs to align with the moving average setup before taking a trade.

Rules for Long Trades

Trend Confirmation:
- The 20, 50, and 100 EMAs must be in ascending order.
- Price must be trading above the 20 EMA.
Setup:
- Price must pull back and touch the 20 EMA (it’s acceptable if candles close slightly below it).
Signal:
- A candle must close back above the 20 EMA.
- The Price Oscillator must show a green bar.
Stop Loss:
- Set the stop loss just below the most recent swing low.
Take Profit:
- Target can be set at the same distance as the stop loss for a 1:1 risk-to-reward ratio, or at double the stop loss distance for a 2:1 reward.

Rules for Short Trades

Trend Confirmation:
- The 100, 50, and 20 EMAs must be in descending order.
- Price must be trading below the 20 EMA.
Setup:
- Price must rise up to touch the 20 EMA (candles can close slightly above it).
Signal:
- A candle must close back below the 20 EMA.
- The Price Oscillator must show a red bar.
Stop Loss:
- Place the stop loss just above the most recent swing high.
Take Profit:
- Set target at the same distance as the stop loss for a 1:1 risk-to-reward ratio, or at double the stop loss distance for a 2:1 reward.

When Not to Trade

Out-of-Order Moving Averages:
- If the EMAs are not in proper order (e.g., 100 EMA between 20 and 50 EMA or 20 EMA between 50 and 100 EMA), avoid trading as these conditions suggest a transition or range-bound market.
Squashed Moving Averages:
- When the EMAs are very close together (even if in the correct order), this indicates a sideways or consolidating market. Avoid trades until the EMAs spread apart, signaling a clear trend direction.

Additional Notes

Confirmation: The Price Oscillator’s color doesn’t need to change on the exact candle that closes outside the 20 EMA; as long as it matches the trade direction, the trade is valid.
Time Frames and Pairs: The FX Money Bounce works on all time frames and currency pairs.
Profit Potential: Small stop losses and a 2:1 risk-to-reward ratio can yield numerous profitable opportunities by sticking with the trend and waiting for clear signals.

This strategy emphasizes simplicity and trend alignment, making it a solid option for identifying profitable trading opportunities in trending markets.