The MACD Swing Trading forex strategy is designed to trade within a defined price channel and profit from the consistent oscillation of price within the support and resistance zones.
The simple idea behind this strategy is as simple as going bullish when price tests the support area and bearish when it tests resistance.
The Vegas_S_P_Daily.ex4, Volume_Weighted_MA.ex4 and MACD indicators are the right ingredients needed to allow swing traders spot price channels, smoothen price and gauge trends respectively.
Chart Setup
MetaTrader4 Indicators: Vegas_S_P_Daily (Colors Width Modified; #0=2, #1-2), Volume_Weighted_MA (Inputs Variable Modified; Period_MA-56, Price_MA=5), MACD (Default Setting)
Preferred Time Frame(s): 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-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 if the following indicator or chart pattern gets put on display:
- If the deep pink line of the Volume_Weighted_MA custom indicator intersect the lines (green & blue) of the Vegas_S_P_Daily custom indicator in a bottom up fashion as depicted on Fig. 1.0, a trigger to go long is advised.
- If the histograms of the MACD custom indicator break above the 0.00 level as shown on Fig. 1.0, price is said to be driven higher i.e. a signal to buy the selected forex pair.
Stop Loss for Buy Entry: Place stop loss below swing trading support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If price closes below the deep pink line of the Volume_Weighted_MA custom indicator during a buy alert, an exit or take profit is rightly advised.
- If the green histograms of the MACD indicator dips below the 0.00 level while a buy signal is running, price is said to be making a U-turn, hence an exit or take profit will suffice.
Sell Entry Rules
Enter a sell order if the following holds sway:
- If the deep pink line of the Volume_Weighted_MA custom indicator intersect the lines (green & blue) of the Vegas_S_P_Daily custom indicator in a top downward manner as illustrated on Fig. 1.1, a trigger to go short is advised.
- If the histograms of the MACD custom indicator break below the 0.00 level as seen on Fig. 1.1, price is said to be pushed lower i.e. a signal to sell the forex pair of interest.
Stop Loss for Sell Entry: Place stop loss above swing trading resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes to the fore:
- If price closes above the deep pink line of the Volume_Weighted_MA custom indicator during a sell signal, a trigger to exit or take profit will suffice.
- If the green histograms of the MACD indicator readjust to form above the 0.00 level while a sell signal is ongoing, bears power is said to be weaning, hence an exit or take profit will do.
Sell Trade Example
Fig. 1.1
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About The Trading Indicators
The Vegas_S_P_Daily.ex4 custom indicator is a trend following indicator that emulates the 24 EMA and 28 EMA crosses in depicting price action.
The Volume_Weighted_MA.ex4 custom indicator shares a lot of similarity to the simple moving average.
Nevertheless, the Volume Weighted MA places a lot more emphasis on the volume in a given period of time.
The general concept about the Volume_Weighted_MA.ex4 indicator is that price is given more weight during heavy trading action.
The Moving average convergence divergence (MACD) is a trend-following momentum indicator that reveals the connection between two moving averages of price.