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Chapter 19, Part II. Indicators’ Application for Estimating of Trending Market. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    DMA and MACD cooperation


    In general, this is just a beginner’s thought on this topic. More closely we will discuss it, when we will talk about multiple time frame trading. Also we need a Fib retracement tool along with MACD and DMA. The idea of this method is simple. First, we need identify the thrusting move on the market. For that purpose we will use 3x3 DMA.

    Second, when the initial thrust will stop and the market will turn to retracement, we need MACD/MACDP and our Fib tool to estimate potential levels, where we can enter in the direction of the thrust. In fact, this method is not for possession of a trend, but to catch the nearest continuation of an initial thrusting move, that could be part of a trend later. When and if you’ll catch it – then you may act as you want, move your stop to breakeven and may wait for rather extended targets, or, take the nearest one. There are no forbidden choices. Once your stop is at breakeven, you have a riskless trade… 1.

    Identify the trend. Here we use simple 3x3 DMA. We will call move as “thrust” if market shows at least 8-10 bars with close in direction of thrust, no closes beyond 3x3 DMA. Preferable, if market even does not touch 3x3 DMA, like on chart #6:

    Chart #6 | 60-min EUR/USD thrust identification with 3x3 DMA [​IMG]

    See, we have excellent thrust down. The number of black candles is obviously greater than 8-10. There is no even single close above 3x3 DMA. Even more, the market has touched it only once, but during all the other time there is a good separation between the MA and price. Other words, the thrust down is perfect.

    Pipruit: And we need definitely thrust? Why we can’t just have bearish trend, based on MACD, for instance?
    Commander in Pips: Because the foundation of this approach is existing momentum, that price gets during a thrusting move. Even, when conditions have changed, the market tries to continue move in the direction of the thrust mechanically. It will do it even more, if conditions have not changed.

    Pipruit: But why?

     
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 18, 2016
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