Quasimodo Forex Strategy

The Quasimodo Forex strategy is rooted around some form of support and resistance patterns which in most case is the foundation of many profitable trading strategies.

The general idea behind this system is to extend a horizontal level into the future price from the left shoulder and to then execute buy and sell entries based on this zone.

Quasimodo Short Signal Pattern is explained as follows

  1. The presence of a preceding uptrend in the markets
  2. Price should register a fresh high, dip and test a fresh local low
  3. Price then surges above the prior high (in No. 1) to register a new higher high
  4. Price then declines to register a fresh lower low (somewhat below No. 2)
  5. Price then heads to the first high in No 1. (but is unable to register a new higher high).

A short trigger is in place sequel to the condition in No. 5.

The reverse of the above stated steps is the Quasimodo Long Signal Pattern and the addition of technical indicators to this increases the confidence in the setup.

Chart Setup

MetaTrader 4 Indicators: RainbowMMA_05.ex4 (Default Parameter), r_Gator.ex4 (Colors Modified; #0=None, #1=None), DeMarker.ex4 (Parameters Modified; Period=29)

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

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Buy Trade Example: USD/CAD (US Dollar / Canadian Dollar), H1 Chart

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  • Watch out for the formation of the Quasimodo Long Signal Pattern, which includes the presence of a preceding bears trend, price is seen to make a fresh low at point 1, proceed to make a run higher to form a fresh local high at Point 2, dips to form a fresh lower low at point 3, price rallies back to form a fresh higher high at 4 and then declines to form support around the level from the left shoulder on Point 1 at Point 5.
  • If the pink and lime lines of the RainbowMMA_05 custom indicator cross below the blue line of the r_Gator indicator in a bottom up manner as seen on Fig. 1.0, price is said to be pushed to the upside i.e. a trigger to buy the designated currency pair.
  • If the light sea green line of the DeMarker Metatrader 4 indicator break and hovers above the 0.50 horizontal level as shown on Fig. 1.0, the general market sentiment is said to be bullish, thus a trigger to buy the desired forex pair.

Stop Loss for Buy Entry: Place stop loss 2-5 pips below the previous support low price.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  • If the pink and lime lines of the RainbowMMA_05 custom indicator intersect the blue r_Gator indicator line while a bullish trend is ongoing, a bearish reversal is said to be looming, hence an exit or take profit stance will suffice.
  • If the light sea green line of the DeMarker indicator dips below the 0.50 reference level during the course of a bullish trend (refer to Fig. 1.0), it is pointing to weaning bulls power i.e. a signal to exit or take profit immediately.

Sell Entry Rules

Enter a sell order if the following holds true:

  • Watch out for the formation of the Quasimodo Short Signal Pattern, which includes the presence of a preceding bulls trend, price is seen to make a fresh high at point 1, then makes a run higher to form a fresh local low at Point 2, surges higher to form a fresh higher high at point 3, price declines to form a fresh lower low at 4 and then surges higher to form resistance around the level from the left shoulder on Point 1 at Point 5.
  • If the pink and lime lines of the RainbowMMA_05 custom indicator cross above the blue line of the r_Gator indicator in a top downward fashion as depicted on Fig.1.1, price is said to be dragged lower i.e. a trigger to sell the selected forex pair.
  • If the light sea green line of the DeMarker forex indicator breaksand hovers below the 0.50 horizontal level as seen on Fig. 1.1, the overall market sentiment is said to be bearish, thus a trigger to sell the designated forex pair.

Stop Loss for Sell Entry: Place stop loss 2-5 pips above the previous resistance high price.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  • If the pink and lime lines of the RainbowMMA_05 custom indicator intersect the blue r_Gator indicator line during the course of a bearish trend, a bullish reversal is said to be imminent, hence an exit or take profit stance will do.
  • If the light sea green line of the DeMarker rises above the 0.50 horizontal level while a bearish trend is ongoing (check out to Fig. 1.1), bearish market pressures is said to be easing, therefore an exit or take profit stance is apt.

Sell Trade Example: USD/CAD (US Dollar / Canadian Dollar), H1 Chart

Fig. 1.1

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About The Forex Technical Indicators Used

The RainbowMMA_05 custom indicator is the fifth GMMA forex series of eleven technical indicators, largely dependent on the Guppy multi moving average.

The r_Gator is an indicator that takes after the Alligator MT4 indicator (since they show comparable values for the MA periods), but the r_gator only produces its signal earlier than the Alligator.

The DeMarker indicator is an oscillator designed by Tom Demark that also finds use when traders are trying to determine potential overbought and oversold regions in the market.

Easy Installation

Start using this forex strategy in just 5 minutes. Click here to get started now.

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