high probability 4hr trading strategies

The Forex market is perpetually dynamic, giving you an opportunity to trade each second.

Heretofore information technology doesn't give you high-probability trade setups all second, right?

Then how do we percolate out only the high-probability trading setups between these infinite streams of opportunities provided to you every bit?

This is exactly what we are going to blab ou in this clause.

Specifically, the at a lower place infographic explain my 6-footstep process to identify high probability trade setups consistently.

Thereupon Army of the Righteou's prompt into the opening move.

Important Note

Keep in mind that we utilizing 2H, 1H and the 30 Proceedings for these trading techniques.

Step 01: An Established Trend

This is the selfsame initiative of distinguishing a high chance black eye trade apparatus. Think of this step as a foundation of the whole reversal trading setup.

Now we are looking for reversals of trends, right? Merely for that, we need to take an firm slue (Uptrend or downtrend) in our hand.

In Forex trading, there are various trading methods we can use to identify a trend. Some traders are using moving averages, veer lines and market structure. We use of goods and services pure price action context method. It is simple and straightforward.

Take a look at the double on a lower floor, which illustrates how uptrend and downtrend markets are shaped.

Happening the leftish, you can see an uptrend. IT is easy to individuality. As long atomic number 3 price making higher highs followed by high lows, it is an uptrend, and contrariwise as long as cost making lower lows and lower highs it is a downtrend.

In real forex chart, this is how an uptrend looks the likes of. 👇

… and a downtrend looks like this. 👇

Note

Pay very stopping point attention to all step out we'Re taking. At the end of this article, we will take a few examples of patronage and testament apply these steps to them. This way, you can understand the process behind these steps.

Okey, countenance's usurp that we have an habitual trend in our hand. Next, let's move into the second step where we are going talk about trade location

Step 02: RSI Circumstance danadenosine monophosphate; Trade Location (Picking Superior Trade Location)

Step 02 is all about finding the higher probability trade area to anticipate a market reversal.

Personally, I'll do this by using 2H RSI and the Key levels.

First, let's talk about how the RSI index helps us to find higher chance trade areas. Stay fresh in mind that we expend 2H timeframe with the RSI indicator.

Instantly, this is impressible. Every we have to dress is to find RSI oversold and overbought signals in the 2H timeframe.

Why looking for overbought and oversold signals in 2H? Have a count at the chart below.

According to the above chart, you can catch that all fourth dimension RSI in oversold or overbought, the food market is either passing awake or falling. (Commentator the coloured box in the preceding graph). This is an well-situated and objective way to pinpoint highs and lows in the market. But keep in mind that this is not always going to lic.

For that, we deman to confirm these RSI overbought and oversold signals.

This is where nam levels similar support and resistance enter to play.

Upon the acknowledgement of the RSI oversold danamp; overbought in the 2H time frame, our next task is to confirm this RSI signals. Basically, we can do this by identifying high chance trade areas.

This can be settled by recognizing the right support and electrical resistance, while at the same time RSI showing overbought and oversold signal.

Go along in mind that I only use 2H and 4H timeframes to specify these levels. Since support and impedance from 2H and 4H timeframes tend to draw big market players, the potential for massive reversals is forever high.

With that in judgment, let's see how I draw these support and resistance level.

My approach is quite straight forrader. The first thing I do, starting with a naked chart, is to check if the securities industry is at the support level or at the impedance level. If IT's at a certain level, I'm going to bookmark the specific pair and search for reversals in the future, and that's non the case, which means that the market is at a NO Gentleman'S LAND, I just ignore such vogue pairs.

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Let's take a few examples to clarify this, Have a look at the EURJPY 2-hour chart below,

Make a view the current location of the market. It's at a very crucial level, isn't it? If we look left, there are three monolithic bounces connected this level, and this makes this a zone of value to me, and I'm sure I'm exit to keep this pair on my radar.

Close, get a load at the GBPAUD 2H chart below,

In that graph, the commercialize is in no man's set down, and even if you look left, you can't learn a simple bounce off that level. Therefore GBPJPY is not in a high probability area and we should avoid trade on pairs like this.

Awesome, Now you know wherefore RSI overbought and oversold signals are valuable. Also, you're now intimate with identifying support and resistance level.

Now ahead go in stone's throw three, let's find how to combine the RSI and Key levels to identify paragon levels to anticipate potential reversal opportunities. And also combining these two, we can avoid lots of losing trades as healthy.

Now have a look at the chart below.

In the graph supra you can visualize that, RSI oversold and underpin level allied nicely at the same fourth dimension which increases the probability of a reversal. See subsequently price shoot like a rocket.

Now let's see how these two trading confluences helps us debar most of the losing trade. Take a look at the USDJPY 2 hour chart below.

At a glint, you can determine that RSI generated three successive oversold sold signals which jumper cable to unprofitable trading, honorable? Merely since these oversold signals are non aligned with the key levels (support, resistance, round numbers) we just ignore these level due to the low chance.

Retributory like that in my trading career, trading locations such as support/resistance levels, spherical numbers and swing points are the best trading filter. These levels are selfsame utilizable, in particular when it comes to identifying high probability trade areas.

With that step 02 is as wel complete. At present you have a trending market with a high probability trade location to look for a reversal.

Next, let's expire on to step trinity and examine the current trend to realise the weaknesses and specialty of the curve.

Step 03: Observe the Trend to Recognize the Weaknesses of the Vogue

Until now,

In Step 01 – We identified a well-established trend connected a 30-second and 1-hour graph. then,

In Step 02 – We identified a high probability craft area utilizing RSI and key level in 2 hours and 4-hour timeframes.

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Now is the time to identify the weaknesses of the trend we characterised in the introductory step.

For that, we use 4 trading techniques which are evidenced to be profitable in the end.

1. Size of the Trend Wave
2. Size of the Retracement Make a motion
3. Break of the Old Higher Low or Lower High
4. Trend Line Bounce Loser

Head terminated our guide on Reversal Trading to learn about these 4 trading techniques. In this article, we explain these techniques with comprehensive examples.

I highly recommend you guys to read that article earlier continuing from here.

A an example, let's see how to use Trend Wave to gauge the weaknesses of an happening-going trend. Have a look at the chart below,

In the above AUDUSD 30-minute chart, you tin see that grocery was in a industrial-strength uptrend with cost fashioning serial higher highs followed by higher lows.

Immediately have a view the three trend waves pronounced in the higher up chart. Have you noticed anything important? Yeah! It is the sizing of the waves. They are getting smaller and smaller indicating miss of bullish momentum. Just like that, you crapper use trend waves to understand the momentum behind the curve. You crapper also use the other three factors we mentioned earlier As well.

With that, before enter step 04, let's combine what we learned in these 3 stairs as yet. For that study the CADJPY 30-minute chart below carefully.

Let's go step by step,

01 – First we can see a strong uptrend with price making serial of higher highs followed away high lows.

02 – Back, atomic number 3 price approached the operative resistance storey marked in the chart, the RSI indicator started to show over-bought condition. Now price action is sitting just below the key resistance even while the RSI showing over-bought signal. So, we can consider this is a high probability area.

03 – Nowadays have a expression at the cu waves. Showtime trend waves are strong and tenacious indicating heavy optimistic momentum. Just as terms approach to the key electric resistance horizontal surface, trend waves are getting little and smaller suggesting lack of optimistic momentum.

At the moment we have a weak uptrend trading more or less the high probability area. Specifically, when considering the trend waves, it clearly defines the take-profit happened in the marked resistance area. When considering these factors, we seat close that there is a high probability of market reversal.

But, we can't just blindly place orders happening the market assuming they're going override. This is a quick path to go broke.

Then how serve we previse and enamour the reversal on suitable fourth dimension?

This is where reversal chart patterns come into gambling.

Step 04 – Use Reversal Chart Pattern to Confirm the Trend Reverse

In the world of forex trading, on that point are lots of reversals patterns. Many of them are proven to exist utile and some of them are not.

In my trading, the best reversal pattern that worked for Pine Tree State are:

1. Double Top and Double Bottom Blueprint
2. Head and Shoulders Formula
3. Break of the Local Structure Level
4. Break and Retest Pattern
5. Momentum Drive Pattern

Keep in mind that, I used 1-hour or the 30 minutes chart to discover these patterns.

Erst again you can learn how we utilizing these pattern in reversal trading including trade entry in this article – Reversal Trading: The Definitive Guide.

If you are acquainted these patterns keep reading, merely if not I extremely recommend to interpret the above article before continuation from here.

Net ball's see how these patterns worked in the real graph. Now have a look at the chart below.

01 – First we dismiss see that the commercialize is in a strong uptrend with price making serial publication of higher highs followed by high lows.

02 – Next take a look at the resistor level marked in the graph. It is a high probability area to flavour for a market reversal. Besides at the same time, the RSI is also showing overbought signals which is a advantageous guide.

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03 – Now take a look at the retracement moves. They are getting deeper and deeper suggesting miss of bullish impulse.

04 – And in conclusion own a view the head and shoulders pattern formed at the resistance dismantle. This is what confirms the trend turnabout.

Have you seen how the switch apparatus builds from nowhere to a higher probability deal setup? Information technology's easy, neat bumptious, and most importantly, it's highly systematic, which essentially allows you to be consistent in the forex marketplace.

Now the all the technicals are aligned perfectly, next it is all above placing the orders and catching the reversal, perpendicular?

Merely, what if you caught in a retracement?

This is where footstep 05 comes into play.

Related – Reverse Trading: 5 Practical Entree Strategies

Related – Head and Shoulders Pattern in Forex – A Reversal Trading Strategy

Age-related – How to Trade Double Bottom Pattern: A Step-Away-Step Maneuver

Tread 05 – Wait for Momentum Shift Before Capital punishment

Even if we have taken all the steps enrolled above, there is always a take chances of being trapped in a retracement, not a transposition.

Accordant to my backtesting results, I cognise that if I follow the above stairs in a systematic come on, I will minimize the amount of time I have been stuck in the retracements.

And so to keep ME from being cragfast in a retracement or in another degree, I would state that, in order to get an philosophical doctrine trade entry, I decided to level up my trading strategy by adding two commercial indicators that assistant me evaluate the momentum shift behind buyers and sellers in an objective way and finally help ME get involved in flip-flop moves at the right time.

The two indicators are:

1. Ace Style Indicator, and
2. Custom Build Trend Identifier

With the combination of these two indicators, I give the sack execute trades in an objective means and on the right time.

Instantly, What is the Super Trend Index? Let's clear up this by victimisation the below graph.

In the above chart, the staircase wish line in the grey colour is the Super Trend Indicator. In an uptrend, it plots on a lower floor the Leontyne Price and in a downtrend, it plots above price.

Now induce a look at the green box. Information technology represents an uptrend with price making higher high while Super trend index stepping upward along with the price actions.

Next, take a look at the beginning of the red box, on there the super trend indicant just move above the damage action indicating the momentum shift from bullish to bearish. Look what happened later on that, the price actually concluded up reversing, right?

Now, I desire you got the idea Here. The super trend indicator helps us to define the impulse displacement in an accusative way.

At once let's talk about the next indicator which is our custom shape trend identifier. When combining these two indicators, they help me to overcome workable trade entries every time regardless of the trade consequence.

Now have a look at the chart beneath.

Perceiver the above chart. Noticed any change?

The way candle changed it's colour is totally transformed. In conventional candlesticks, the colour is change in every candlestick base on how information technology closed (bullish operating theater bearish).

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But in the preceding chart, when buyers are strong, candlesticks are green and when the Sellers are strong candlesticks are ruby. That is the Trend Identifier worked in the backend.

Now as a turnaround trader, I use this indicator to identify the shifts in trends. For instance during an uptrend where the common candles are impression, a colour in exchange into ruddy indicate optimistic to pessimistic momentum shift OR in another word it is shift from uptrend to downtrend.

That is what exactly happened in the higher up graph. In the above chart, first we can discove that the super slew indicator started to plots above from Leontyne Price actions and after withing 2 candles, the swerve identifier also turns into a red indicating momentum shift of the on loss uptrend.

For ME this is the best time to catch the blow.

With that this is how I use these two indicators to find out mometums shifts and with these two indicant there nobelium early or bad entry, only optimal reversal trading entries.

With that let's move into the last step and after that let's talk few patronage examples to elucidate these steps.

Step 06 – Barter Implementation

This is where we integrate complete the steps we've taken hitherto to bring them into action. At once the swap setups are being effected, and all we take in left is to place orders and in reality hinge upon the change of mind. Allow's clarify this last tread by making apply of the few trades we have closed.

Now let takes the GBPJPY 1 hour chart below and talk of trading scenario ill-trea by step.

Step 01 – This is where we look for an established movement. In the above GBPJPY graph, we can go out that the marketplace was in a strong uptrend with price making higher highs and higher lows.

Step 02 – Straight off have a look at where is the trend stop. Information technology Newmarket at the channel top which is coming from the higher timeframe. Also at the same time, the RSI indicating overbought with divergence. These two trading confluences together make this area a high probability area.

Step 03 – Let's observe the trend a little bit. Get a load at the start and second trend undulate. They are big lengthiness moves which indicate strong bullish impulse. But have a deal the trend wave 03 – it is considerably small when comparing to the else two waves and also it failed to strain another higher high. This Mary Leontyne Pric behaviour indicating lack of bullish impulse.

Step 04 – Finally because of the miss of bullish momentum at the area we chose on step 2, the cost action mechanism eventually formed a head and shoulders pattern Gram-positive the high probability of drift volte-face.

Step 05 – This is where we looked for a impulse shift, systematic to prevent US from acquiring caught in a retracement. Have look for at the swerve identifier, it turns into red which allows the States to ride the vogue.

Step out 06 – Finally we had a trade with all the step are aligned and now IT is a issue of executing the trade. Just we placed a sell order and price occupied U.S. and hit take aim gain in a matter of a sole trading day.

Nowadays I intend you got the idea of why these steps are important. The primary profit is that it helps us to stay consistency by following this orderly trading approach.

With that here is another trade, which is a breakeven trade.

Instantly you force out explain this trade, right? With that present is another deal which non worked in our prefer.

As Mark Douglas said in his book, the market is stochastic distributions of winners and losers. So the same thing is applied for this trading strategy as well.

So this is non a magic bullet nor a get unwholesome excitable trading scheme. Keep that in mind when you use these trading techniques we talked in this clause.

With that, I hope you learned something valuable from this post. If so, give us small support by joint this with your friends.

high probability 4hr trading strategies

Source: https://traderevenuepro.com/how-to-identify-trend-reversals/

Posted by: andersonhunisgung.blogspot.com

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