Hikkake Price Action Forex Trading Strategy

Trading price action usually invokes surprise and excitement at the same time.

It is common knowledge that price is a base for any technical indicator and the Hikkake forex trading strategy takes in consideration three price action bars to identify the pattern.

Chart Setup

MetaTrader4 Indicators: Bands.ex4 (default setting), Binaryarrow.ex4 (default setting)

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

Recommended Trading Sessions: Any (London, New York, Tokyo)

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy order if the following indicator or chart patterns get displayed:

  1. If a bullish Hikkake pattern forms i.e. the candlestick after the inside bar must possess a lower low and lower high as shown on Fig. 1.0 to denote a bearish break-out of the inside bar. A long Hikkake setup is in place when the bearish break-out fails. Enter a buy at the high of the original inside bar for the next 3 bars (ours was on bar no. 2).
  2. Following a squeeze and subsequent widening of the Bands custom indicator, if price trades along the upper band of the Bands indicator, it is an indication of bullish sentiment (refer to Fig. 1.0).

Stop Loss for Buy Entry: Place stop loss at convenient point below the low of the mother bar.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or condition are present on the activity chart:

  1. If the Bands custom indicator squeezes during a bullish trend, it is an indication of decreasing volatility i.e. a trigger to exit or take profit without delay.
  2. If the red downward pointing arrow of the binaryarrow.ex4 custom indicator forms above price bars as shown on Fig. 1.0, it is an indication of a possible reversal i.e. an exit or take profit is recommended.

Sell Entry Rules

Place a sell order if the following chart or indicator pattern is on display:

  1. If a bearish Hikkake pattern forms i.e. the candlestick after the inside bar must possess a higher high and higher low as depicted on Fig. 1.1 to denote a bullish break-out of the inside bar. A short Hikkake setup is in place when the bullish break-out fails. Enter a sell at the low of the original inside bar for the next 3 bars (ours was on bar no. 2 once again).
  2. Following a squeeze and subsequent widening of the Bands custom indicator, if price trades along the lower band of the Bands indicator, it is a signal that price is being pressured lower i.e. a trigger to go short.

Stop Loss for Sell Entry: Place stop loss at convenient point above the high of the mother bar.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following rules or conditions hold sway in the market:

  1. If the Bands custom indicator squeezes during a bearish trend, it is an indication of decreasing volatility i.e. a trigger to exit or take profit straight away.
  2. If the aqua upward pointing arrow of the binaryarrow.ex4 custom indicator forms below price bars as shown on Fig. 1.1, it is an indication of a possible reversal, hence an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

Download the Hikkake Price Action Forex Trading Strategy

About The Trading Indicators

The Bands indicator is a typical Bollinger Bands indicator that is used to gauge volatility, offering traders insight into possible market breakouts.

The binaryarrows.ex4 is a trend following indicator that forms an aqua upward (bullish trend) or red downward (bearish trend) colored arrow below or above price bars respectively.

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