48 # D2D Trading System

Swing Trading with Moving Averages

Submit by Ketang

 

Currency Pairs – Forex, Major Pairs (GBPUSD, EURUSD, USDCHF, USDJPY)

Charts – 4 hour and 1 Hour

Charting Software – Any

Indicators

Trendlines

Pivot Points

100 Period Simple Moving Average

150 Period Simple Moving Average

MACD (8,17,9)

Stochastic (8,3,3)

 


Setting Up Your Charts

This system uses 2 time frames, a 4 hour chart and a 1 hour chart. Add the

following indicators with the settings shown below to both charts and they should

look similar to the charts shown below.

100 Period Simple Moving Average

150 Period Simple Moving Average

MACD (8,17,9)

Stochastic (8,3,3)

RULES

1. Determine the trend on the 4hr chart chart using trendlines, MACD and

Stochastics.

2. Determine the trend on the 1hr chart chart using trendlines, MACD and

Stochastics.

 

3. Take note of the pivot level on the 1 hr chart.

4. Look for consolidation with a symmetrical triangle

5. Wait for a breakout

6. If break out is to the upside, the MACD (either the Histogram or Signal Line) must be above 0 or if it is below 0 there should be bullish divergence. If break out

is to the downside, the MACD (either the Histogram or Signal Line) must be below 0 or if it is above 0 there should be bearish divergence.

7. After the breakout, wait for the price to pull back then open a pending order just above the resistance trend line if you are going long OR just below the support trend line if you are going short.


If there is no pullback place your entry order 2 pips below the low of the breakout candle if you are going short OR 2 pips above the high of the breakout candle if you are going long.

8. Place your stop loss at the next support/resistance level depending on whether you are going long or short.

Short Trade Example:

Have a look at the following chart. This is a 4 hour chart of the GBP/USD pair. At

Point A the 100 SMA has crossed below the 150 SMA telling us the market is in

a downtrend.

At Point B I have drawn a trendline from the highest high at the start of the move

down to the next highest high. This trendline shows the market is in a downtrend

as well.

At Point C, the MACD Signal Line and Histogram are both well below zero

signaling a downtrend.

At Point D the Stochastic is in the Overbought area and the %K line has just

started to cross below the %D line telling us the market is in a downtrend.

All our indicators on the 4 hour chart are telling us that the market is in a

downtrend so we can now switch to the 1 hour chart to determine the trend, look

for a breakout and a possible entry level.

If one of the indicators in this example gave us a buy signal we would not switch

down to the 1hour chart until all the indicators are telling us to sell. All the

indicators must be in agreement.

Since all the indicators are signaling that the market is in a downtrend it is safe to

switch to the 1 hour chart and look for an opportunity to sell. Take a look at the

following chart.

 

At Point A the 100 SMA is below the 150 SMA telling us the market is in a

downtrend. Point B shows the 2 trendlines I had drawn when I spotted the market

starting to consolidate.

Point C is the Pivot Point level which I have added after getting the figure from

the Action Forex Pivot Levels website.

At Point D the MACD Histogram had slipped below zero with the Signal Line

following closely so this gives us further confirmation that the market is in a

downtrend.

At Point E the Stochastic indicator had moved out of the Overbought region and

the %K Line had already crossed below the %D Line, giving us further

confirmation that the market was in a downtrend.

At Point F there was a false breakout to the upside but because we have already

established that the trend was down we ignored this breakout and continued to

wait for a breakout to the short side.

At Point G we got the breakout of the trendlines to the short side that we were

looking for. Once the candle had closed I waited for it to retrace then place my

entry order 2 pips below the low of the breakout candle at Point H.

I placed my stop loss at Point I and my target at point J which are Support and

Resistance levels which I obtained from the Action Forex website. The order was

opened shortly after and as I write this I am currently $420 in profit.

Long Trade Example:

Have a look at the following chart. This is a 4 hour chart of the USD/CHF pair. At

Point B the 100 SMA has crossed above the 150 SMA telling us the market is in

an uptrend.

At Point A I have drawn two trendlines from the lowest low at the start of the

move up to the next lowest low. These trendlines show the market is in an

uptrend as well.

 

At Point C, the MACD Signal Line and Histogram are both well above zero

signaling an uptrend.

At Point D the Stochastic is in the Overbought area which is not ideal but the %K

line has to crossed above the %D line telling us the market is in a uptrend.

All our indicators on the 4 hour chart are telling us that the market is in an

uptrend so we can now switch to the 1 hour chart to determine the trend, look for

a breakout and a possible entry level.

If one of the indicators in this example gave us a sell signal we would not switch

down to the 1hour chart until all the indicators are telling us to buy. All the

indicators must be in agreement.

Since all the indicators are signaling the market is in a downtrend it is safe to

switch to the 1 hour chart and look for an opportunity to sell. Take a look at the

following chart.

 

At Point A the 100 SMA is above the 150 SMA telling us the market is in an

uptrend. Point B shows the 2 trendlines I have drawn when I spotted the market

started to consolidate.

Point C is the Pivot Point level which I have added after getting the figure from

the Action Forex Pivot Levels website.

At Point D the MACD Histogram and Signal Line is above zero so this gives us

further confirmation that the market is in an uptrend.

At Point E, the %K Line has crossed above the %D Line, giving us confirmation

that the market is in an uptrend.

At Point F there was a breakout to the upside. Once the candle had close I

waited for it to retrace then place my entry order 2 pips above the high of the

breakout candle.

I placed my stop loss below the nearest Support level which I obtained from the

Action Forex website. I then placed my target limit at the nearest Resistance

level. The order was opened shortly after and the target limit was easily

achieved.

 

Trenlines metatrader indicator

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