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TRADING RANGING MARKETS WITH KELTNER BANDSTrading Ranging Markets with Keltner Channel It is said that the number one account killer in the market is a ranging market. Consolidations are very difficult to trade. However, you can take advantage of the difference in the way Keltner channel system can be used in combination with other technical indicators. The price won’t really touch the bands when it bounces between the upper and lower envelopes. When we’re in a ranging market, you’ll often see that the price will fail to touch the bands. The majority of the time the price will hug the middle band. This anomaly in price behavior requires us to use a secondary technical indicator to find profitable trades. Since the Forex market spends most of its time in consolidation, around 70% of the time, it’s mandatory to have a range trading strategy to survive in this market. For range trading we like to use Keltner Channel bands in combination with a 2-period RSI indicator. We tweaked the RSI settings so we can better identify tops and bottoms within a trading range. Note #3: For this Keltner trading strategy we use the 90-10 levels of overbought and oversold readings. Here are some rules that can guide you to make the best trading decisions: Keltner envelopes need to turn flat, to signal a consolidation. Price needs to break below the middle band. A buy order is triggered once the 2-period RSI goes below 10 indicating oversold conditions. The protective stop loss can be hidden on the other side of the Keltner band. For the long side take profit when the RSI reaches the 90 level.
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ETHUSD 1H CUP & HANDLE TRADING STRATEGYStep #1: Identify a downtrend and a rounded retracement into that downtrend (The Cup) We’re breaking down the Cup and Handle trading strategy into several steps. The first step is to identify an downtrend and a rounded retracement into that bearish trend. That rounded bottom is the first component of the Cup and Handle pattern. The strength and the longevity of the prevailing trend is important as it will determine the success of the trade. How deep the rounded bottom goes will also influence our potential profit. So far, so good. Now we move to the second component of the Cup and Handle pattern and the second step of the Cup and Handle trading strategy. Step #2: Draw the second component of the Cup and Handle pattern – The Handle You can start drawing the handle once the cup component is finished. Now, the cup component doesn’t necessarily need to end exactly at the same price where it started, but it needs to be near that price zone, or price target. Once you see the price moving away from the cup in a tight range you can start looking to draw the handle. Step #3: Entry 1 at the Handle breakout and Entry 2 at the first Cup peak breakout We’re going to implement an unorthodox entry method and split our trade into two trades as follows: First sell entry on the Handle breakout, the lower line (resistance) that defines the Handle structure is our trigger line of the first sell order. Second sell entry on the breakout of the initial peak from where we started drawing the cup. Step #4: Take Profit equals the same distance in price as measured from the initial Cup peak to the bottom of the cup The ideal profit target for the Cup and Handle trading strategy would be equal to the same distance in price as measured from the initial Cup peak to the bottom of the Cup. The Cup and Handle pattern target maximizes the potential profit and it gives us the chance to capture the entire trend. You are simply projecting the same distance in price to the upside using as a starting point the initial Cup peak. Step #5: Place initial SL above the rounded bottom. After the second entry is triggered move both SL above the Handle swing low. Since we’re splitting our trade into two trades, we’re going to have two protective stop loss. The initial stop loss is placed just above the round bottom. Since at this stage the Cup and Handle pattern is not yet confirmed we need to give it more space, that’s why we’ve chosen to place the SL aabove the round bottom. Once we enter our second sell order we can now safely move the SL for both positions above the Handle swing low.
BITFINEX:ETHUSDShort
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GBPAUD 1H MACD TREND FOLLOWING STRATEGYStep #1: Wait for the MACD lines to develop a higher high followed by a lower high swing point. This is an unorthodox approach to technical analysis. But, we at Trading Strategy Guides.com are different. We don’t mind doing uncomfortable things if that’s what it takes to succeed in this business. The first rule of thumb to recognize a swing high on the MACD indicator is to look at the price chart if the respective currency pair is doing a swing high the same as the MACD indicator does. A higher high is the highest swing price point on a chart and must be higher than all previous swing high points. While a lower high happens when the swing point is lower than the previous swing high point. Step #2: Connect the MACD line swing points that you have identified in Step #1 with a trendline This step is quite simple, right? At this point, we really ignored the MACD histogram because much of the information contained by the histogram is already showing up by the moving averages. Look at the price action now and compare it to our MACD trendline we drew early. We can clearly notice that the MACD contains the price action much better and reflects the trend much clear. But, at this point, we’re still not done with the MACD indicator, which brings us to the critical part of our MACD Trend Following Strategy. Step #3: Wait for the MACD line to break above the trendline. (Entry at the market price as soon as the MACD line breaks above) When the MACD line (the blue line) crosses the signal line (the orange line) it’s an early signal that a bullish trend might start. However, if trading would be that easy we would all be millionaires, right? And that’s the reason why our MACD Trend Following Strategy is so unique. We’re not only waiting for the MACD moving averages to cross over but we also have our other criteria for the price action to break aka the trend line we drew early. This is a clever way to filter out the false MACD signals, but you have to be equipped with the right mindset and have patience until all the piece of the puzzle come together. If you were to trade just based on the MACD crossover over time you’ll lose money because that’s not a reliable strategy. But if you use the MACD indicator along with other criteria such what this strategy tells you to do, you will find great trade entries on a consistent basis. Step #4: Use Protective Stop Loss Order. (Place the SL below the most recent swing low) Now, that you already know how to enter a trade at this point you have to learn how to manage risk and where to place the SL. After all, a trader is basically a risk manager. You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5-10 pips away from the low, to protect yourself from possible false breakouts. The MACD Trend Following Strategy triggered the buy signal right at the start of a new trend and what is most important the timing is more than perfection. We bought GBP/AUD the same day the bullish divergence trend started. Now, what this has to do with the SL? Basically, a good entry price means a smaller stop loss and ultimately it means you’ll lose a lot less comparing it with the profit potential, so a positive risk to reward ratio. Step #5: Take Profit when the MACD crossover happens in the opposite direction of our entry Knowing when to take profit is as important as knowing when to enter a trade. However, we want to make sure we don’t use the same trading technique as for our entry order. When the MACD line (the blue line) produces signal line crossovers (the orange line) we want to close the position and take full profits. Before taking profits, it’s important to wait for the candle close – either the 4h or the daily candle – depending on the time frame you trade so you make sure the MACD crossover actually happens. Note** The above was an example of a buy trade using the MACD Trend Following Strategy. Use the exact same rules – but in reverse – for a sell trade.
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2
KNOW WHAT TO LOOK FOR IN A RANGE PATTERNThe market is working a range pattern the majority of the time which is good news if you know what to look for. Range patterns are full of information that will help you anticipate what comes next, so you can trade. Here are 3 examples that will make you chart smarter! The first chart is my personal favorite range pattern. When you see a well established range, watch for price to "overshoot" your expected high or low. When that happens, get ready! As soon as it goes past the expected high or low, place pending orders to sell from the top or buy from the bottom. If price comes back to the range, it will come back fast! The 2nd chart is an example of past performance predicting future price movement. During a range pattern, look back 15 bars from the middle of the range, and anticipate the market moving that far in the opposite direction. In this example, the solid arrow is predictive of the dashed arrow. The last chart is an example of how the typical slow or no momentum you would expect is happening in the middle third, shaded in orange. To and from the outer edges of the range, momentum shows up.
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DOUBLE TOP REVERSAL PATTERN BTCUSD 30MStep #1: Identify the Phase of the Market. The Double Top reversal needs an uptrend. Just because you can spot the double top reversal it doesn’t mean you have to jump in willy-nilly. Remember, we need the right context and everything needs to line up for a good double top reversal. So, the first step is to identify the phase or the market condition. At any given moment the market can be trading either up, or down, or it can go sideways. As we previously established the Double Top reversal needs a prior uptrend. Since this is a reversal trading strategy, we first need a prior trend. Otherwise, we end up trading just a ranging market. This is something we want to avoid, particularly if we trade the Double Top reversal pattern. Step #2: The historical precedent. An A++ Double Top Reversal is composed of 2 Rounded Tops The second step of the Double Top chart pattern strategy is to find what we call the historical precedent or a chart pattern. We don’t want to make a trading decision without price confirmation and in our case we use the double top reversal pattern. You need to identify two rounded tops in order for the double top breakout to be considered tradable. But, what is a rounded top? In technical analysis, a rounded top is simply a price formation that typically occurs after an uptrend, prices move upward and then quickly roll back downwards creating a dome or sometimes an inverted “V.” Now, of course, that depending on the double top reversal structure the inverted V top will vary in size and magnitude. But the idea is that we need a quick move up followed by a quick move down to define a rounded top. Note* A valid double top reversal has two rounded tops Let’s move forward to the third criteria of our double top chart pattern strategy. Step #3: Allow a maximum 10 pips variation between the two tops. Don’t seek perfection, because in trading you need to get rid of your idealistic mindset as the double top reversal will not look perfect all the time, so be flexible. This is the reason why we need to allow a maximum of 10 pips variation between the two tops. The probability of two tops happening at the same exact price level is almost impossible. You’ll often find that the two tops have slight variations, but they happen near the same price zone. What is more important is the closing price, which can align perfectly if the location of the double top pattern is good. So far, so good. Now we to determine an entry technique for our Double Top chart pattern strategy. See below: Step #4: Sell when Double Top breakout candle closes below the neckline. After we identify the phase of the market, and the characteristics of a good double top reversal we need to wait for confirmation that momentum is shifting. The Double Top breakout candle is our signal that the momentum has shifted and it’s what it confirms and validates the double top pattern. You’ll see the double top breakout happen over and over again, but it’s important to analyze them within the context of the market trend. The next logical thing we need to establish for the Double top chart pattern strategy is where to take profits. See below… Step #5: Take Profit equals 2, 3 x times the distance in price as measured from the highest peak to the Neckline The minimum profit target for the double top pattern is approximately equal to 2 or 3 x times the distance in price as measured from the double top to the neckline. If we project the same price distance 2 or 3 times more to the downside we obtain our first take profit zone for the Double Top chart pattern strategy. The double top pattern can produce a major reversal so we advise you to be very flexible with your profit target not to miss any big profit opportunity. The next important thing we need to establish is where to place your protective stop loss. See below… Step #6: Place the protective stop loss slightly above the resistance created by the Double Top reversal The Double Top chart pattern strategy gives you a simple way to quantify risk because you can place your protective stop loss slightly above the double top pattern The double top pattern really gives you the opportunity to also trade with a tight stop loss, which is great as we always want to keep losses at minimum. Note*** The above was an example of a SELL trade… Use the same rules – but in reverse – for a BUY trade, but this time we’re going to use the double bottom pattern.
BITFINEX:BTCUSDShort
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BEST RIPPLE STRATEGY IN CRYPTOCURRENCY TRADINGStep #1 Divide your 5-Minute Chart by Trading Sessions Since we’re using a strategy only for day trading Ripple we need to make use of intraday charts. The ideal time frame to implement our Ripple strategy is the 5-minute chart. Also read the simple way of trading multiple time frames in forex. The 15-minute chart will give us a better view of the overall price action and on the Ripple intraday trend. Most cryptocurrency trading platforms can do this automatically and place a vertical line at the start of a new trading day. By doing this we can better visualize where the opening daily price is for each new trading session. Step #2 If we’re on an Up-Day, Mark on your Chart the Time Window between 9 – 10 GMT Time As we mentioned earlier we have found out through backtesting that the best time to buy Ripple is between 9 – 10 GMT. However, that’s only half of the equation because our statistics also show that the best time to buy Ripple is in the up days. What do we mean by this? We want to buy Ripple between 9 AM and 10 AM GMT. Ripple is trading above the opening price. Our Ripple strategy is very intuitive! If we buy Ripple above the opening price it means that we’re buying in the direction of the prevailing trend. Essentially, this is a trend following strategy deployed on intraday trends. Step #3 Buy anywhere between the 9 – 10 GMT Time Window From 9 to 10 GMT we have our window of buying opportunity. This time window also coincides with the London open and it’s the time when many cryptocurrency traders step into the market. Now, depending on your trading skills and your experience you can fine tune your entry point within this time window. Step #4 When day trading XRP Ripple hide your SL below the Opening Price It’s quite intuitive why the logical place to hide your protective stop loss is below the opening price. Any deep below Ripple opening price will alter the bullish sentiment. A sell-off below the opening price indicates that the buyers are weak and maybe we’re better off trying to buy Ripple on another day. In order to make profit trading Ripple we also need a strategy to get out of our position. We’re also proposing an unorthodox way when it comes to the take profit strategy which brings us to the next step. Step #5 Take profit once the Price Travels the Same Price Distance it did from the opening price until 9 AM GMT We’re going to suggest the best way to take profit on Ripple. For an easy understanding of our Ripple take profit strategy we’re going to break down the strategy in two parts: First, measure the price distance from the opening price to the high established between 9 to 10 AM GMT. Second, project the same price distance to the upside measured from the low established between the 9 – 10 GMT window. The same trading concept has been used multiple times in our various trading strategies. We recommend taking this approach because it incorporates the dynamics of the price rather than an arbitrary price on your chart. Conclusion - Ripple Trading Strategy It is said that Ripple has the potential to disrupt the SWIFT system for sending large amounts of money to different countries. Ripple doesn’t have much competition in this space and they have the right infrastructure to be the next Bitcoin. You can also read our best short-term trading strategy.
BITFINEX:XRPUSDLong
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TIPS FOR RANGE TRADINGRanges contain elements of certainty which are rare in a speculative industry. With previously established highs and lows, you can anticipate where the market is likely to hold, change direction or stop all together. 5 interesting facts about range patterns when charting price action. 1 - The range pattern is good for traders who are terrible at cutting their losses. The nature of a range is to not make progress in one direction, so this is the best pattern to trade if you don’t like taking your stops. If the market moves against your open trade during a range, your patience may be rewarded, because chances are price will swing back in your direction. 2 - Ranges contain areas where you can expect momentum. That sounds like a contradiction, right? It's not. You can expect the typical slow market condition in a range, but only in the middle third of the range space. Count on momentum showing up when it runs to and from the outer edges of the range. 3 - Past performance predicts future movement. You’ve heard it - you’ve probably even said it - “Past performance is no guarantee of future results.” However, when it comes to range patterns, I keep track of where price has been in the past 15 bars. Do the math because that’s exactly how far you can expect price to move in the opposite direction in the next 15 bars. 4 - After a trend, it only takes 7 bars of time in the range pattern to tell me which direction is coming next. Add the 50 simple moving average to your chart. If price crosses that line and stays below it for more than 7 bars, it’s probably not going to return to the trend any time soon. 5 - The best range trades happen when your expected high or low is suddenly obliterated. Huh? It's true, and this is my secret weapon in trading. If price breaks out of a well established range pattern, immediately place pending orders to trade in the opposite direction. If price fails the breakout (which it usually does), it comes barreling back through the range pattern, and those trades move into profit very quickly.
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NZDJPY 1D/1H ASCENDING TRIANGLE TRADESPrice is in an ascending triangle chart pattern There were 4 failed Bullish breakout attempts of the triangle top Price is falling to triangle bottom trendline 1H Short trade Sell Stop @ 76.20 Sell TP at bottom triangle trendline There will be a decision point at the bottom triangle trendline Long trade Price will rise up to the top triangle trendline Bullish breakout of top trendline Enter on a 15m break-hook-go chart pattern 1st Buy TP @ 77.42 2nd Buy TP @ 78.17 3rd Buy TP @ 78.68 Short trade Price will have a Bearish breakout of the bottom triangle trendline Enter on a 15m break-hook-go chart pattern 1st Sell TP @ 73.53 2nd Sell TP @ 72.04 Find your SL
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