DiNapoli Detrend Oscillator Forex Strategy

The DiNapoli Detrend Oscillator strategy is a currency trading strategy that employs cyclical fluctuations over a defined time frame, putting into consideration the volatility of the forex marketplace.

As such the strategy is built around the DiNapoli Detrend Oscillator Histogram and the Donchian Bands MT4 indicator.

Chart Setup

MetaTrader4 Indicators: DiNapoli Detrend Oscillator Histogram.ex4 (default setting), Donchian Bands.ex4 (default setting)

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

Recommended Trading Sessions: Any

Currency Pairs: Major pairs and cross pairs

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy in the market if the following conditions or rules hold sway:

  1. If the blue histogram of the DiNapoli Detrend Oscillator breaks above the 0.00 level, it is an indication that price is being pushed higher i.e. a bullish trend.
  2. If price opens and closes above the green middle line of the Donchian Bands, it is a trigger to go long. Watch how price trades along the outer upper Donchian Bands on Fig. 1.0, an indication that bullish sentiment is currently winning in the market.

Stop Loss for Buy Entry: Place stop loss below the lower Donchian Band or below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following criteria are met:

  1. If the blue histogram of the DiNapoli Detrend Oscillator forms below the 0.00 level, it is a trigger to exit or take profit on position(s).
  2. If price bars declines and a candle opens and closes below the green middle line of the Donchian Bands, then it is a signal to exit or take profit accordingly.

Sell Entry Rules

Enter a sell position if the following rules or conditions hold sway:

  1. If the blue histogram of the DiNapoli Detrend Oscillator breaks below the 0.00 level, it is an indication that price is being pushed lower i.e. a bearish trend.
  2. If price opens and closes below the green middle line of the Donchian Bands, it is a trigger to go short. Take a close look at how price trades along the lower outer Donchian Bands, a clear indication of a bearish sentiment in the market.

Stop Loss for Sell Entry: Place stop loss above the upper Donchian Band or above  immediate resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit on position(s) if the following chart or indicator patterns get displayed:

  1. If the blue histogram of the DiNapoli Detrend Oscillator forms above the 0.00 level, it is a trigger to exit or take profit on position(s).
  2. If price bars surges and a candle opens and closes above the green middle line of the Donchian Bands as shown on Fig. 1.1, then it is a signal to exit or take profit accordingly.

Fig. 1.1

Free Download

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About The Trading Indicators

The DiNapoli Detrend Oscillator custom indicator was first introduced in Joe DiNapoli in book “Trading with DiNapoli Levels.”

The indicator uses a histogram that oscillates above or below the 0.00 level as trigger for buy or sell alerts respectively.

The Donchian Bands is a custom indicator that was developed by Richard Donchian as a tool to spot volatility of a market price.

The Donchian Bands gets narrow when there’s no noise in the market, but rapid movements in price will see the bands widens. This trading indicator can offer us buy and sell signals.

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