326 # 5 min Bollinger Bands Breakout
Bollinger Bands Breakout Trading system
Submit by Wolf 23/02/2013
Time Frame 5min
Currency pairs: majors.
Setup:
Forex Indicators:
Parabolic Sar (default);
MACD Histogram (9,, 12, 26, Close, );
Slow Stochastic (5,3,3, Exponential).
trading the breakout is to enter a trade when the price
‘breaks out’ of a tight range, because often it tends to keep moving in the
same direction. We use our Bollinger Bands on our charts to spot this trading
opportunity.
In the above example, EUR/USD 5 min chart, notice how the Bollinger Bands
tighten and squeeze together. When this happens you know that there is a
Breakout coming. As soon as the exchange rate line (brown), breaks out of
the outside Bollinger Bands, it signals your entry buy/sell. In this case if you
bought EUR/USD at 1.1815 and Closed your position at 1.1840 , you could
have made a fast 25 pip profit.
Notice the confirming indicators: The exchange rate line (brown) is above
the EMA 10 (red), the middle BB line (green) and the EMA 50 blue. The
Parabolic SAR dots are on the bottom.
The MACD Histogram is above 0 signaling upward momentum. The RSI is
above 50 signaling upward momentum, and the Slow Stochastic blue line is
above the red line signaling bullish momentum.
Here is an example of EUR/USD 5 minute breakout SELL. You could have sold
the EUR/USD at 1.1440 and closed your position at 1.1390 for a 50 pip profit.
Notice the confirming indicators: The exchange rate line is below the EMA
10 (red), the middle BB line (green) and the EMA 50 blue. The Parabolic
SAR dots are on the top.
The MACD Histogram is below 0 signaling downward momentum. The RSI
is below 50 signaling downward momentum, and the Slow Stochastic blue
line is below the red line signaling bearish momentum.
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