3# High-Probability Trading Strategy Using Pure Price Action ITC Tools and RMI Trend Sniper

Submit by Janus Trader

This trading strategy combines the precision of Pure Price Action ITC Tools by Lux Algo and the momentum-based analysis of RMI Trend Sniper by Zack88. The strategy focuses on identifying market structure, key price levels, and trend strength to pinpoint optimal trade entries and exits.

1. Pure Price Action ITC Tools (by Lux Algo)

• Purpose: The Pure Price Action ITC Tools indicator emphasizes raw price action, avoiding lagging indicators like moving averages or oscillators. It helps traders make decisions based on price structure, support/resistance zones, and candlestick patterns.

• Features:

  • Support and Resistance Levels: Automatically identifies key areas where price reacts, offering entry and exit points.

  • Candlestick Patterns: Highlights candlestick formations such as engulfing bars, pin bars, or inside bars that signal reversals or continuations.

  • Market Structure: Detects trends by reading higher highs/higher lows for uptrends and lower highs/lower lows for downtrends, helping you stay aligned with market direction.

2. RMI Trend Sniper (by Zack88)

• Purpose: The RMI Trend Sniper indicator combines the Relative Momentum Index (RMI) with moving average-based signals to detect trend shifts and generate precise buy/sell arrows based on momentum changes. These signals are particularly useful for entering trades at the beginning of new trends or catching reversals.

• Features:

  • Buy/Sell Signals: Generates green arrows for buy signals and red arrows for sell signals when momentum shifts are detected.

  • Momentum Confirmation: Combines the RMI with moving average momentum, filtering out false signals by waiting for sustained trend movement.

  • Support/Resistance Band: Provides a dynamic range based on the ATR, indicating key support/resistance areas that can serve as potential targets or stop loss levels.

  • Trend Coloring: Changes the candle color to green during bullish momentum and red during bearish momentum.

Trading Strategy

Timeframe: 1-hour or 4-hour chart

Assets: Forex pairs, major stocks, or cryptocurrencies

Entry Conditions for a Buy (Long Trade):

1. RMI Trend Sniper Setup:

   • A green arrow (buy signal) appears on the chart, indicating the start of bullish momentum.

   • The candle color has shifted to green, confirming the change in market sentiment.

   • The price is above or near the RWMA (range-weighted moving average) line, indicating alignment with the upward trend.

2. Price Action Confirmation (Pure Price Action ITC Tools):

   • The price is in a clear uptrend, forming higher highs and higher lows.

   • The price has retraced to a key support zone, identified by Pure Price Action ITC Tools.

   • A bullish candlestick pattern (such as a bullish engulfing or pin bar) forms at the support level, signaling a continuation of the uptrend.

3. Entry: Once the buy arrow from RMI Trend Sniper appears and price action confirms with a bullish pattern at support, enter a long position.

4. Stop Loss: Place the stop loss just below the nearest support zone or the recent swing low, as marked by Pure Price Action ITC Tools or the ATR-based support band from RMI Trend Sniper.

5. Take Profit:

   • First target at the next resistance level, identified by Pure Price Action ITC Tools.

   • Alternatively, close part of the position at a 1:1.3 risk-reward ratio and trail the stop loss as the price continues upward.

Entry Conditions for a Sell (Short Trade):

1. RMI Trend Sniper Setup:

   • A red arrow (sell signal) appears on the chart, indicating the start of bearish momentum.

   • The candle color has shifted to red, confirming the downward momentum.

   • The price is below or near the RWMA (range-weighted moving average) line, indicating alignment with the downward trend.

2. Price Action Confirmation (Pure Price Action ITC Tools):

   • The price is in a clear downtrend, forming lower highs and lower lows.

   • The price has retraced to a significant resistance zone, identified by Pure Price Action ITC Tools.

   • A bearish candlestick pattern (such as a bearish engulfing or shooting star) forms at the resistance level, signaling a continuation of the downtrend.

3. Entry: Once the sell arrow from RMI Trend Sniper appears and price action confirms with a bearish pattern at resistance, enter a short position.

4. Stop Loss: Place the stop loss just above the nearest resistance zone or the recent swing high, as marked by Pure Price Action ITC Tools or the ATR-based resistance band from RMI Trend Sniper.

5. Take Profit:

   • First target at the next support level, identified by Pure Price Action ITC Tools.

   • Alternatively, close part of the position at a 1:3 risk-reward ratio and trail the stop loss as the price continues downward.

Conclusion

This strategy takes advantage of RMI Trend Sniper’s momentum-based buy/sell signals, supported by the precise price level analysis from Pure Price Action ITC Tools. By waiting for both the arrow-based signal and confirmation from price action patterns and key zones, traders can enhance the accuracy of their trades and reduce the risk of entering false signals.