The Ravi-Rainbow forex trading strategy is a hybrid trading signal generating system that uses the ravisignal MT4 indicator and the popular Rainbow indicator.
It is a simple trading strategy that can be used for short term and long term trading.
MetaTrader4 Indicators: ravisignal.ex4 (custom setting-color modified), RainbowMMA_09.ex4 (custom setting-color modified)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Recommended Trading Sessions: Any
Currency Pairs: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, NZD/USD, GBP/JPY
Buy Example (click the image for full size):
Long Entry Rules:
Initiate a buy position when the following conditions are in place:
- Ravisignal indicator forms a green histogram bar above the zero mark. It is important to also note the yellow histogram bar that denotes a decrease in momentum on the existing trend. Therefore, if a bullish trend is ongoing and the yellow histogram bars forms, it mean the bulls are beginning to lose momentum.
- A bullish candle opens and closes after the RainbowMMA_09 line crosses signals a buy signal.
Stop Loss for Long Entry: ≥5- 40 pips below the low of the candlestick that confirmed the buy entry signal.
Exit Strategy/Take Profit for Long Entry:
Confirm the following chart pattern before exiting or taking profits on a position(s):
- Ravisignal indicators forms red histogram below the zero mark.
- A bearish candlestick opens and closes below the RainbowMMA_09 (following the indicator’s crosses).
Sell Entry Rules:
The rules for a sell entry using the Ravi-Rainbow Forex Trading Strategy is as follows:
- The Ravisignal indicator forms a red colored histogram below the zero mark. As the length of the histogram increases downward, so also is the strength of the bearish signal.
- A bearish candlestick opens and closes below the RainbowMMA_09 indicator.
Stop Loss for Short Entry: ≥5- 40 pips above the high of the candlestick that confirmed the sell entry signal.
Exit Strategy/Take Profit for Short Entry:
Exit your short positions upon confirming the following indicator pattern:
- The Ravisignal indicator reverses upward with the formation of green histogram above the zero mark.
- The RainbowMMA_09 indicator lines intersects and a bullish candle opens and closes above it.
It is crucial to note that the strategy is a on a 4-hour time frame, meaning signals generated can last for days or even week. In the example sighted on Fig. 1.1 the GBP/JPY 4-Hour chart shows that our sell that was initiated on the 02-01-2016 ran through to 14-01-2016.
This means you’re expected to hold your positions for days, while closely monitoring your chart patterns.
About The Trading Indicators
The Ravisignal is an MT4 indicator that deploys two moving averages computed in percent. The indicator has been modified to depict bullish trends with its green color zone, while bearish trends are designated with red.
We did modify the default color of grey to yellow, which is usually a region of uncertainty or no trend.
Lastly, the RainbowMMA_09 is the ninth GMMA forex indicator in a series of eleven indicators that are built on the Guppy multi moving average.
The RainbowMMA_09 is made up of EMA (23), EMA (21), EMA (17), EMA (15) and EMA (14).