The DMI Directional Movement Index forex strategy was developed to find the best possible market trend direction with the help of the 36 period exponential moving average.
Interpreting price action can be difficult and misleading sometimes but our strategy is designed to ease this process.
We have modified the strategy to work on all time frames and any financial instrument.
The first step that you should take before doing anything here is to set up your charts, so you can respond swiftly when the trade signal setup pops up on your screen.
Let’s get started:
MetaTrader4 Indicators: Kijun-sen+.ex4 (Colors Width Modified; #0=2), Moving Average.ex4 (Parameters Modified; Period=36, MA method=Exponential, Style=Magenta), dsl_-_DMI_oscillator.ex4 (Default Setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day, 1-Week, 1-Month
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example: AUD/NZD (Australian Dollar / New Zealand Dollar), M30 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the magenta 36 EMA Metatrader 4 indicator line crosses below the deep sky blue Kijun-sen+ custom indicator line, price is said to be driven higher i.e. a trigger to buy the designated currency pair.
- If the line of the dsl_-_DMI_oscillator custom indicator breaks above the zero horizontal level, the overall market sentiment is said to be bullish, and as such a trigger to go long on the specified currency pair.
Stop Loss for Buy Entry: Place stop loss 3 pips below the most recent swing low.
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, the magenta 36 EMA indicator line intersects the deep sky blue Kijun-sen+ indicator line, bulls are said to be closing their positions increasingly, as such an exit or take profit will suffice.
- If the line of the dsl_-_DMI_oscillator custom indicator dips below the 0.00 level during the course of a bullish signal (see Fig. 1.0), it is signaling diminishing bulls power, thus an exit or take profit stance is recommended.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the magenta 36 EMA indicator line crosses above the deep sky blue Kijun-sen+ custom indicator line, price is said to be dragged lower i.e. a trigger to go short on the currency pair of focus.
- If the line of the dsl_-_DMI_oscillator custom indicator falls below the zero horizontal level, the general market sentiment is said to be bearish, therefore it is advised to sell the designated forex pair straightaway.
Stop Loss for Sell Entry: Place stop loss 3 pips above the most recent resistance high.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If while a bearish trend is running, the magenta 36 EMA indicator line intersects the deep sky blue Kijun-sen+ indicator line, bears are said to be closing their positions more and more, hence an exit or take profit stance will do.
- If the line of the dsl_-_DMI_oscillator custom indicator surges above the 0.00 level while a bearish trend is ongoing (refer to Fig. 1.1), it is signaling weaning bearish momentum, thus an exit or take profit stance is advised.
Sell Trade Example: AUD/NZD (Australian Dollar / New Zealand Dollar), M30 Chart
About The Forex Technical Indicators Used
The Kijun-sen+ custom indicator is a significant member of the Ichimoku Kinko Hyo indicator family and can be used to measure medium-term momentum.
The 36 EMA is an exponential moving average that has its period set to 36 and reduces the lag by adding more weight to recent price.
The dsl_-_DMI_oscillator on the other hand is a DMI oscillator version of dsl (discontinued signal lines) and can be used both in trend and counter trend trading.
The dsl in this case adss to momentum strength estimation.
Start using this forex strategy in just 5 minutes. Click here to get started now.