The 5-Minute Forex scalping strategy for the AUD/CHF pair is a short-term trading system that defines market trends while yielding trade alerts that are accompanied with a high likelihood of success.
This strategy uses two distinct technical indicators as a reference for spotting probable entry points.
The M5 and M15 time frame charts are the perfect fit for this strategy.
The trade setup rules are crafted in a manner that allows good signal filtering which also gives it enhanced accuracy in spotting trends.
The strategy produced very good testing results on the AUD/CHF pair but it should work on any other pair equally.
MetaTrader 4 Indicators: Parabolic-close.ex4 (Default Setting), Commodity Channel Index.ex4 (Parameters Modified; Period=35)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example: AUD/CHF (Australian Dollar / Swiss Franc), M5 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If price bar opens and closes above the blue line of the Parabolic-close custom indicator as illustrated on Fig. 1.0, bulls are said to be driving price higher, thus a trigger to go long on the designated currency pair.
- If the light sea green line of the Commodity Channel Index Metatrader 4 forex indicator breaksand runs above the 0.00 reference level as depicted on Fig. 1.0, price is said to be pressured to the upside i.e. a signal to buy the currency pair of interest.
Stop Loss for Buy Entry: Place stop loss below short-term support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If while a bullish trend is ongoing, price is seen to open and close below the blue line of the Parabolic-close custom indicator as shown on Fig. 1.0, more bulls are said to be closing their market positions increasingly, thus an exit or take profit stance is recommended.
- If the light sea green line of the Commodity Channel Index indicator dips below the 0.00 horizontal level during the course of a bullish trend, it is pointing to diminishing bulls power, therefore an exit or take profit stance is advised.
Sell Entry Rules
Enter a sell order if the following holds true:
- If price bar opens and closes below the blue line of the Parabolic-close custom indicator as exemplified on Fig. 1.1, bears are said to be dragging price lower, thus a trigger to go short on the selected forex pair.
- If the light sea green line of the Commodity Channel Index forex indicator breaksand hovers below the 0.00 signal level as shown on Fig. 1.1, the general market sentiment is said to be bearish i.e. a signal to sell the currency pair of focus.
Stop Loss for Sell Entry: Place stop loss above short-term resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If price is seen to open and close above the blue line of the Parabolic-close custom indicator during the course of a bearish trend (see Fig. 1.1), bears are said to be leaving the market in their droves, therefore an exit or take profit stance will suffice.
- If the light sea green line of the Commodity Channel Index forex indicator surges above the 0.00 reference level while a bearish trend is ongoing, bears power is said to be weaning, as such an exit or take profit stance is apt.
Sell Trade Example: AUD/CHF (Australian Dollar / Swiss Franc), M5 Chart
About The Forex Technical Indicators Used
The Parabolic-close custom indicator is an enhanced Parabolic SAR indicator that can be used in analyzing trending markets.
The Parabolic-close is constructed on the price chart in the form of a line.
It shares a lot of similarities with the Moving Average Indicator but the only difference is that it moves with higher acceleration and may alter its position in relation to price.
The Commodity Channel Index or CCI is a momentum based indicator that falls under the oscillator classification.
Regardless of its name, the CCI is not exclusively designed for the commodity market but can be used in the forex market to gauge overbought/oversold conditions, as well as spot trends.
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