Absolute Strength Histogram Forex Trading Strategy

The Absolute Strength Histogram Forex trading strategy is designed to allow traders leverage on buy and sell signals derived from three distinct trading indicators.

In order to suit your preferences, all technical indicators used are adaptable for the modification of their input parameters.

The strategy is suitable for trending markets and will do marvel when used on volatile pairs.

Traders should pay attention to the distance between the green and red lines found on the absolute-strength-histogram indicator.

The wider the distance between them, the more powerful the trend in focus is.

When this distance begins to give way, it is okay to assume that volatility is thinning out.

Chart Setup

MetaTrader4 Indicators: absolute-strength-histogram.ex4 (Inputs Variable Modified; Length=41), i-ama-optimum.ex4 (Inputs Variable Modified; P=100, Colors Width Modified; #0=4, #1=4), hull-moving-average.ex4 (Default Setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a bullish trade if the following indicator or chart pattern gets put on display:

  1. If the black dotted orange line of the i-ama-optimum.ex4Metatrader 4 custom indicator crosses the green line section of the hull-moving-average indicator in a bottom up manner as depicted on Fig. 1.0, price is said to be driven higher i.e. a trigger to go long on the designated currency pair.
  2. If the green histograms of the absolute-strength-histogram custom indicator stacks up within the indicator window (see Fig. 1.0), price is said to be pressured higher i.e. a trigger to go long on the forex pair of interest.

Stop Loss for Buy Entry: Place stop loss 3 pips below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit from all trades if the following rules or conditions takes precedence:

  1. If the black dotted orange line of the i-ama-optimum.ex4indicator intersects the line of the hull-moving-average indicator during a bullish trend, bulls power is said to be weaning, as such an exit or take profit will suffice.
  2. If the absolute-strength-histogram indicator displays a red histogram while a bullish trend is ongoing, a bearish reversal is said to be imminent, as such an exit or take profit will do.

Sell Entry Rules

Go short if the following setups gets displayed successfully on the activity chart:

  1. If the black dotted orange line of the i-ama-optimum.ex4Metatrader 4 custom indicator crosses the dark violet line section of the hull-moving-average indicator in a top downward fashion as exemplified on Fig. 1.1, price is said to be pushed lower i.e. a trigger to go short on the currency pair of focus.
  2. If the red histograms of the absolute-strength-histogram custom indicator stacks up within the indicator window (refer to Fig. 1.1), price is said to be driven lower i.e. a trigger to go short on the designated fx pair.

Stop Loss for Sell Entry: Place stop loss 3 pips above resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the black dotted orange line of the i-ama-optimum.ex4indicator cuts through the line of the hull-moving-average indicator during a bearish trend, bears power is said to be halting, as such an exit or take profit is advised.
  2. If the absolute-strength-histogram indicator displays a green histogram while a bearish trend is ongoing, a bullish reversal is said to be in the cards, hence a trigger to exit or take profit is recommended.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The absolute-strength-histogram.ex4 is a trend indicator that represents a histogram with red and green bars, along with a slow and fast moving averages lines.

The i-ama-optimum.ex4 is an optimized version of the Kaufman’s Adaptive Moving Average (AMA) that was originally developed by Perry Kaufman and finds use on short and long periods.

The hull-moving-average.ex4 is a popular trend following indicator that is built on moving averages with a 21 period.

It tries to remove lag altogether and succeeds in enhancing smoothing concurrently.

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