The Directional Ichimoku Average forex trading strategy follows the primary currency trend and uses the popular ADX indicator and 32 EMA for entry and exit signals.
The Ichimoku is added to gauge price momentum and define support and resistance zones.
Chart Setup
MetaTrader4 Indicators: ADX.ex4 (Parameters Modified; Period=28), Ichimoku.ex4 (Default Settings), 32 EMA.ex4
Preferred Time Frame(s): 1-Minute, 5-Minute, 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 displayed:
- If the lime green line of the 32 EMA MT4 indicator crosses the red line of the Ichimoku custom indicator in a bottom up fashion as seen on Fig. 1.0, price is said to be taken higher i.e. a trigger to buy the selected currency pair.
- If the yellow green +DI line of the ADX indicator is greater than the wheat –DI line as illustrated on Fig. 1.0, price is said to be driven higher i.e. a signal to go long on the designated forex pair.
Stop Loss for Buy Entry: Place stop loss 5 pips below short-term support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes center stage:
- If price closes below the lime green line of the 32 EMA while a buy trend is ongoing, an exit or take profit is duly recommended.
- If the wheat –DI line crosses the yellow green +DI line of ADX indicator to stay above as shown on Fig. 1.0, an exit or take profit is recommended.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the lime green line of the 32 EMA MT4 indicator intersects the red line of the Ichimoku custom indicator in a top downward manner (refer to Fig. 1.1), price is said to be driven lower, hence a sell alert.
- If the wheat –DI line is greater than the yellow green +DI line of the ADX MT4 indicator as depicted on Fig. 1.1, price is said to be pushed fairly lower i.e. a sell market trigger.
Stop Loss for Sell Entry: Place stop loss 5 pips above short-term resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If price closes above the lime green line of the 32 EMA indicator while a bearish trend is ongoing, it is a trigger to exit or take profit at once.
- If the wheat –DI line gets aligned below the yellow green +DI line of ADX indicator while a sell signal is running, an exit or take profit will do.
Sell Trade Example
Fig. 1.1
Free Download
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About The Trading Indicators
Developed by Welles Wilder, the average directional index (ADX) is a technical indicator deployed in determining the strength of a trend.
It is typically deployed in a chart window along with two lines identified as the DMI (Directional Movement Indicators).
The 32 EMA is an exponential moving average that has its period set at 32 and reduces the lag by adding more weight to recent price.
Ichimoku is a technical or chart indicator that is also a trend trading system.
The creator of the indicator, Goichi Hosada, introduced Ichimoku as a “one glance” indicator so that in a few seconds you are able to decide whether a tradable trend is present or if you should wait for a better set-up on a specific pair.