MACD Counter Trend Forex Strategy

Contrarian Trading System -.

Contrarian Forex Strategy

Place stop loss above the most recent swing high price. The Moving average convergence divergence MACD is a trend-following momentum indicator that reveals the connection between two moving averages of price. The support and resistance- Ac.

Chart Setup MetaTrader4 Indicators: If the bands of the Bollinger Bands indicator squeezes along with price trading around the red dotted horizontal line of the support and resistance- Ac custom indicator as depicted on Fig. If the MACD custom indicator forms green histograms that are aligned above the 0. If price trades along the upper outer band of the Bollinger Bands, it is a trigger to buy the designated forex pair.

If price shows some resistance along the blue dotted horizontal line, it is indicative of a possible bearish reversal i.

If the MACD custom indicator displays a green histogram below the 0. If the Bollinger Bands contracts, it is a signal that spells decreasing volatility, as such an exit or take profit will suffice.

Sell Entry Rules Enter a sell order if the following holds sway: If the bands of the Bollinger Bands indicator squeezes along with price trading around the blue dotted horizontal line of the support and resistance- Ac custom indicator as see Fig.

The last example is a 6 day bullish move of pips with a retracment of about 85 pips. You can see that after each strong move in the direction of the trend, there is a retracement or consolidation. This stall may take place at a level of Support or Resistance or a Fib level for example. It can further be identified by the types of candlesticks that form at the point of the stall. A trader would be looking for dojis, long wicks or bullish reversal candle patterns along the level of support that is forming.

In other words, they will open a trade in the opposite direction of the original move…they would be selling or fading the AUDJPY in this case. Bear in mind, however, that when trading against the prevailing trend whether on a longer or shorter term chart, a trader is taking on additional risk. To demonstrate this point, o ne thing that is immediately noticeable from our examples on the AUDJPY chart, is that there is really no correlation between the strength or duration of the move and the amount of the retracement.

This is a major challenge when trading against the trend: Lastly, if a trader were using this strategy in a downtrend, the trader wait for the pair to stall in its move to the downside and they would then fade the move by buying the pair. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Take a free trading course with IG Academy. Our interactive online courses help you develop the skills of trading from the ground up. Develop your trading knowledge with our expert-led webinars and in-person seminars on a huge range of topics. A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk-free environment.

Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account. Conditions in the demo account cannot always reasonably reflect all of the market conditions that may affect pricing and execution in a live trading environment. A Counter Trend Trading Strategy.

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