Smashing Forex System part II
Rules for Sell Signals (Short Trades):
- We must first establish that we’re currently in a strong downtrend.
The conditions for determining that price is in a strong downtrend
are as follows:
a. Price is below both EMA50 and EMA200
b. EMA50 just crossed EMA200, and is currently below EMA200.
c. MACD value is negative.
- When we already know that we’re in a downtrend, we’ll then wait for
price to pull-back (retrace).
When price rises, it makes MACD value increase and MACD value
eventually becomes positive.
- The trigger is when MACD value turns from positive back to negative.
When that happens, we enter at market price with two lots.
- Stop Loss: We place a protective stop loss 1 pip above the Highest
Price of the Pull-Back (Retracement).
- Profit Targets: We have 2 different exit strategies for the 2 lots as
follows:
- Exit Strategy 1: We exit the first lot when MACD turns from
negative to positive. At this time, we might also move the stop loss for
the second lot to break-even.
- Exit Strategy 2: We exit the second lot when EMA9 cross EMA20 to
the upside
Figure 8 - That price is in a strong downtrend are as follows: Price is
below both EMA50 and EMA200; EMA50 just crossed EMA200, and is
currently below EMA200; MACD value is negative
Figure 9 - Price pulls back (retraces). When price rises, it makes MACD
value increase and MACD value eventually becomes positive.
Figure 10 - MACD value turns from positive back to negative. When
that happens, we enter at market price with two lots.
Figure 11 - We place a protective stop loss 1 pip above the Highest Price of
the Pull-Back (Retracement).
Figure 12 - We exit the first lot when MACD turns from negative to
positive. At this time, we might also move the stop loss for the second
lot to break-even.
Figure 13 - We exit the second lot when EMA9 cross EMA20 to the
upside.
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