Simple Rangebound Forex Trading Strategy
A simple rangebound forex trading strategy with great profit potential. Tools of the trade: Identify important support and resistance levels on the hourly chart or use the Support and Resistance Metatrader 4 Forex Indicator.
Stoch Oscillator (5,3,3)
How it works
Add the Stoch (5,3,3) oscillator to your chart to pinpoint possible long and short entries in the market.
1) Wait either for a pull back towards support or a rally towards resistance.
2 a) For long trades: Go long if the currency exchange price touches support and goes back up + positive stoch cross from below 20 (see chart above)
2b) For short trades: Go short if the currency exchange price touches resistance and goes back down + negative stoch cross from above 80.
AUD/USD Buy Trade Explanation
1) AUD/USD price touches a significant support level and goes back up. (AUD/USD holds support)
2) The gray circle indicates the time to go long in the market @ 0.8365 (Stoch cross from below 20)
3) Stop loss is set 3 pips below the most recent level of support @ 0.8314
4) Total trading risk: 51 pips. (entry price – stop loss price)
5) Trade objective: 5 pips below resistance @ 0.8502 ( 137 pips)
RESULT: The AUD/USD long trade was successfully closed for 137 pips the same day.