The Double Tunnel Dema forex trading strategy is a well-designed trading strategy that employs an enhance trend following technique.
The technique tries to look at price in a manner where trend strength and price reversal is central.
More so, the DoublecciWoody, FIBTunnel and DEMA MT4 indicators are rightly added to give the strategy its characteristic trend reversal, quick trend recognition and trend reversal respectively.
Chart Setup
MetaTrader4 Indicators: DEMA.ex4 (Inputs Variable Modified; PERIOD=36, Colors Modified; #0=Blue, Colors Width; #0=2), FIBTunnel.ex4 (Default Setting), DoublecciWoody.ex4 (Inputs Variable Modified; TrendCCI_Period=28, CountBars=100000000)
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 put on display:
- If the mostly red lines of the FIBTunnel custom indicator intersects the blue line of the DEMA custom indicator in a bottom up fashion, price is said to be driven to the upside i.e. a trigger to buy the designated currency pair.
- If the dark khaki line and histograms (mostly medium sea green) of the DoublecciWoody custom indicator hovers above the 0.00 signal level, the market sentiment is said to be bullish, hence a buy signal will do.
Stop Loss for Buy Entry: Place stop loss below trading 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 mostly red lines of the FIBTunnel custom indicator while a buy signal is running, bears are said to be taking the session, as such an exit or take profit is recommended.
- If the dark khaki line of the DoublecciWoody custom indicator falls below the 0.00 level during a buy signal, an exit or take profit is duly advised.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the mostly red lines of the FIBTunnel custom indicator intersects the blue line of the DEMA custom indicator in a top downward manner, price is said to be pushed lower i.e. a trigger to sell the selected forex pair.
- If the dark khaki line and histograms (mostly red) of the DoublecciWoody custom indicator hovers below the 0.00 signal level, the market sentiment is said to be bearish, hence a sell signal will suffice.
Stop Loss for Sell Entry: Place stop loss above trading resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If price closes above the mostly red lines of the FIBTunnel custom indicator while a sell signal is ongoing, a bullish reversal is said to be imminent, as such an exit or take profit is advised.
- If the dark khaki line of the DoublecciWoody custom indicator surges above the 0.00 level during a sell signal, an exit or take profit is duly recommended.
Sell Trade Example
Fig. 1.1
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About The Trading Indicators
The Double Exponential Moving Average (DEMA) was designed by Patrick Mulloy as a tool to better respond to changes in the market than the usual moving averages.
The computation of the DEMA is built around a single exponential moving average and a double EMA.
The FIBTunnel custom indicator is made up of series of lines that are closely merged to form a support or resistance level for price depending if price is aligned above or below the indicator.
The DoublecciWoody custom indicator is an oscillator that deploys two CCIs in defining the direction of trend.