The EM Star reversal forex trading strategy is a reversal price pattern and comprises of 3 candlesticks i.e. it is a 3-candlestick formation.
The “EM” stands for “Evening” and “Morning” thus dealing in essence with Evening and Morning Star Reversal.
This strategy can be implemented by just anyone with basic computer click and drag knowledge.
Chart Setup
MetaTrader4 Indicators: Elliot Wave Oscillator34.ex4 (default setting), Fib_Pivotss.ex4 (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Day
Recommended Trading Sessions: Any
Currency Pairs: Any pair
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Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Initiate a buy entry in the market if the following indicator or chart pattern gets displayed:
- If the Morning Star reversal price pattern (Candlesticks 1, 2 & 3) forms around a support level (the lime line of the Fib_Pivots.ex4 custom indicator) as shown on Fig. 1.0, price is said to be pressured upwards i.e. a trigger to go long on the currency pair of interest.
- If the dark khaki colored histograms of the Elliot Wave Oscillator34 custom indicator aligns above the 0.00 signal level, price is said to be somewhat bullish, hence a buy signal is most recommended.
Stop Loss for Buy Entry: Place stop loss 2-5 pips below the immediate support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if any of the following rules or conditions holds sway:
- Watch out for any bullish reversal price action pattern that might develop around the resistance levels plotted by the Fib_Pivots.ex4 custom indicator (refer to our price action strategies), as a clear indication of an exit or take profit trigger.
- If the dark khaki histograms of the Elliot Wave Oscillator34 custom indicator readjusts to align below the 0.00 signal level, it is a trigger to exit or take profit without delay.
Sell Entry Rules
Initiate a sell entry if the following chart or indicator pattern gets displayed:
- If the Evening Star reversal price pattern (Candlesticks 1, 2 & 3)forms around a resistance level (the yellow line of the Fib_Pivots.ex4 custom indicator) as shown on Fig. 1.1, the sentiment in the market is said to be bearish i.e. a trigger to go short on the currency pair of interest.
- If the dark khaki colored histograms of the Elliot Wave Oscillator34 custom indicator aligns below the 0.00 signal level, price is said to be somewhat bearish, hence a sell signal is most recommended.
Stop Loss for Sell Entry: Place stop loss 2-5 pips above the immediate resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following holds sway on the activity chart:
- Watch out for any bearish reversal price action pattern that might develop around the support levels plotted by the Fib_Pivots.ex4 custom indicator (refer to our price action strategies), as a strong indication of an exit or take profit signal.
- If the dark khaki histograms of the Elliot Wave Oscillator34 custom indicator realigns to form above the 0.00 signal level, it is a trigger to exit or take profit straight away.
Sell Trade Example
Fig. 1.1
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About The Trading Indicators
The Elliot Wave Oscillator34 is an oscillator that plots the difference of a 34 and a 5 period simple moving average (SMA) of prices, depicted as histograms aligned above or below a zero reference point.
The Fib_Pivots.ex4 custom indicator is a technical tool that plots Fibonacci levels, thus allowing traders reference resistance or support levels.
The Evening and Morning Star Reversal patterns is a triple candlestick pattern that depicts a bearish and bullish reversal pattern respectively.