Trend Envelopes Forex Trading Strategy

The Trend Envelopes forex strategy is a simple strategy based on the popular trend envelopes indicator. Let’s take a look how to generate buy and sell forex signals from this indicator.

Chart Setup

MetaTrader4 Indicators: TrendEnvelopes_v1.ex4 (default setting), EMAOsMA.ex4 (default setting)

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

Recommended Trading Sessions: Any

Currency Pairs: Any

Download

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy order if the following indicator or chart pattern gets displayed:

  1. If the light blue line of the TrendEnvelopes_v1 custom indicator forms below the candlesticks, it is a signal that price is pressured higher as such, a long position is advised.
  2. If the gold upward pointing arrow of the EMAOsMA.ex4 custom indicator aligns below the candlesticks, while the red line of the EMAOsMA.ex4 custom indicator (within an indicator window) breaks above the 0.00 signal line, it is a sign that the market sentiment is bullish i.e. a signal to go long on the assets of interest.

Stop Loss for Buy Entry: Place stop loss below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit on position(s) if the following rules or conditions hold sway:

  1. If the line of the TrendEnvelopes_v1 custom indicator turns orange and is aligned above the candlesticks as seen on Fig. 1.0, it is a trigger to exit or take profit forthwith.
  2. If the EMAOsMA.ex4 custom indicator forms a green downward pointing arrow placed above the candlesticks and also has its red line break below the 0.00 signal level within its indicator window, it is a trigger to exit or take profit accordingly.

Sell Entry Rules

Initiate a sell entry if the following holds true:

  1. If the orange line of the TrendEnvelopes_v1 custom indicator forms above the candlesticks, it is a signal that price is pressured lower as such, a short position is advised.
  2. If the EMAOsMA.ex4 custom indicator forms a green downward pointing arrow that is aligned above price bars, while its red line within the indicator window falls below the 0.00 signal line, it is a sign that the market sentiment is bearish i.e. a signal to go short.

Stop Loss for Sell Entry: Place stop loss above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following chart patterns are on display:

  1. If the line of the TrendEnvelopes_v1 custom indicator turns light blue and is aligned below the candlesticks as seen on Fig. 1.1, it is a trigger to exit or take profit without delay.
  2. If the EMAOsMA.ex4 custom indicator forms a gold upward pointing arrow placed below the candlesticks and also has its red line break above the 0.00 signal level within its indicator window, it is a trigger to exit or take profit accordingly.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The EMAOsMA.ex4 is an oscillator MA that determines trend in the market via the use of its red line (aligning above or below the 0.00 signal level), along with gold (buy signal) or green (sell signal) arrows.

The TrendEnvelopes_v1 is a custom indicator that shows trend by using its orange (bearish signal) and light blue (bullish signal) lines aligned above or below price bars respectively.

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