Forex Channel Strategy For Metatrader 5

Forex channel trading originates from the traditional trend line concept and is popular among forex traders.

Trading signals are generated when price breaks out of the price channel, either up or down.

The Forex Channel strategy for Metatrader 5 offers a profitable way to trade the currency markets and can be also used to determine good zones to buy or sell.

A buying or selling area is generated when price hits the lower trend line or the upper trend line of the price channel respectively.

The strategy can be used to find both short-term and long-term buy/sell trade opportunities.

Trade Setup 

MetaTrader 5 Indicators: MACD.ex5 (Default Setting), adaptiverenko.ex5 (Default Setting), keltner_channel315.ex5 (Inputs Variable Modified; Moving average period=24), Equidistant channel

Trade Style: Scalping, day trading, swing trading

Trading Sessions: London | New York | Tokyo

Currency Pairs: Majors, cross pairs, exotics

Platform: Metatrader 5 (MT5)

Download

Download the Forex Channel Strategy For Metatrader 5

Buy Trade Example: GBPUSD, H1 Chart

Fig. 1.0

Trading Strategy Rules For Buy and Sell Trades Explained

Buy Entry

Enter a buy trade if the following trading conditions are met:

  1. If price bounces off the lower trend line of the Equidistant channel technical tool, the market is getting ready for a likely breakout to the upside, and as such a bullish signal is advised.
  2. If the silver histograms of the MACD Metatrader 5 forex indicator align above the 0.00 horizontal level as depicted on Fig. 1.0, price is said to be driven higher i.e. a trigger to buy the designated fx pair.
  3. If the middle line of the keltner_channel315 custom indicator turns deep sky blue as shown on Fig. 1.0, the overall market sentiment is said to be bullish, therefore a buy signal is said to be imminent.
  4. If the lime line of the adaptiverenko custom indicator aligns below the candlesticks as seen on Fig. 1.0, price is said to be pressured to the upside, thus a buy signal will do.

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

Suggested Exit Strategy/Take Profit for Buy Trade

Exit the buy trade if the following trading conditions are met:

  1. If price falls below the dark violet support line while a bullish trend ongoing, it is a trigger to exit or take profit at once.
  2. If the MACD indicator pops up a silver histogram that is aligned below the 0.00 level during the course of a bullish signal, it is pointing to diminishing bulls strength i.e. an exit or take profit stance will suffice.
  3. If the middle line of the keltner_channel315 turns pale violet red as indicated on Fig. 1.0, bulls power is said to be weaning, therefore an exit or take profit will do.
  4. If the adaptiverenko forex indicator displays a red line that pops up above the price bars while a bullish trend is running, it is a signal to exit or take profit at once.

Sell Entry

Open a sell trade if the following trading conditions are met:

  1. If price bounces off the upper trend line of the Equidistant channel technical tool, the market is setting itself up for a probable breakout to the downside, and as such a bearish signal is said to be looming.
  2. If the silver histograms of the MACD forex indicator align below the 0.00 horizontal level as exemplified on Fig. 1.1, price is said to be pushed lower i.e. a trigger to sell the selected currency pair.
  3. If the middle line of the keltner_channel315 custom indicator turns pale violet red as demonstrated on Fig. 1.1, the general market sentiment is said to be bearish, therefore a sell signal is said to be in the cards.
  4. If the red line of the adaptiverenko custom indicator align above the candlesticks (see Fig. 1.1), price is said to be dragged lower, thus a sell signal will do.

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

Suggested Exit Strategy/Take Profit for Sell Entry

Exit the sell trade if the following trading conditions are met:

  1. If price rises above the dark violet support line during a bearish trend, it is a trigger to exit or take profit immediately.
  2. If the MACD indicator pops up a silver histogram that is aligned above the 0.00 level during the course of a sell alert, it is pointing to halting bears power i.e. an exit or take profit is duly recommended.
  3. If the middle line of the keltner_channel315 turns deep sky blue as seen on Fig. 1.1, bears power is said to be dissuading, therefore an exit or take profit is advised.
  4. If the adaptiverenko forex indicator displays a lime line that pops up below the candlesticks during a bearish signal, it is a pointing to a likely end to the current trend, therefore an exit or take profit will suffice.

Sell Trade Example: GBPUSD, H1 Chart

Fig. 1.1

Free Download

Download the Forex Channel Strategy For Metatrader 5

MT5 Trading Indicators Used For This Strategy

Designed by Gerald Appel in 1979, the MACD or Mac D, as it is fondly called is a common and multipurpose tool deployed in identifying and following strong trends while also catching trend reversals.

The adaptiverenko forex indicator is a technical tool that spots trends and gauges trailing stops.

The keltner_channel315 indicator represents a volatility-based envelope that are set above and below an exponential moving average.

The Equidistant channel is a technical analysis tool that allows traders plot upper and lower trend lines around price.

Share Now!