How to use the PRICE ACTION IMPULSE TREND
The blocks «Currency ImpulseMeter» and «Currency TrendMeter» are located in separate windows and represent multicurrency oscillators. By monitoring and analyzing dynamics of currency lines in these windows, a user can independently determine the strongest impulse and trend movements, use them in trade, and also accompany open trading positions.
Block «Currency Trend Meter»
This block consists of 8 currency lines (USD EUR GBP AUD NZD JPY CAD CHF), which are colored in the corresponding color. Analysis of the dynamics of their movement makes it possible to obtain a large number of profitable signals for trading.
Trading signal #1 — reversal trading on Currency Trend Meter (the most profitable signal)
PAIT Indicator perfectly showing the reversal of price. With the help of the trend indicator, we can see the currencies that are in the stage of maximum overbought and oversold. Now I’ll show you how to use it for profit.
So, open the indicator of Currency Trend Meter and find the currency lines that fell or rose above/below the levels of 0.012/-0.012:
For example — crossing the top level of 0.012 means that the currency has reached the stage of its maximum overbought. If the currency line crossed the lower level – 0.012, it means that the currency has reached the stage of maximum oversold. In this state of currency can not be a long time, as the laws of the market — speculators always buy cheap currencies and sell expensive. So, we can accurately determine the moment of the price chart reversal.
How to trade on a reversal?
1. Wait until the line of the currency pair turns in the opposite direction.
2. Find the line of another currency, which at this moment is the most distant on the indicator scale.
3. Make a deal in which you buy the currency line which is at the bottom and sell the currency line which is at the top.
For example — the line of GBP is at the bottom of the indicators scale and crossed the oversold level in the opposite direction. So we’re BUY GBP. We see that in the opposite area of the indicator at the top is the USD line. This currency we use for SELL. That is, we make a BUY deal on GBPUSD pair.
When to fix the profit?
After we have made a deal, we follow the further movement of the lines. We need to wait for the moment when these lines a crossed. After crossing of this lines — close the deal:
TO ANALYZE THE LEVELS OF U-TURNS:
H1
0.012
-0.012
H4
0.21
-0.21
M15
0.006
-0.006
Trading signal #2 – Trading against the strongest/weakest currency (the most profitable signal)
Block «Currency Trend Meter» displays the relative strength of currencies in the market basket. The growth or decrease of the currency line relative to other lines means the growth of the price of this currency in the market basket.
The crossing of the zero level by the currency line indicates that the currency has started its new trend. And it is best to trade this currency against another currency according to certain rules:
— if the currency line has crossed the level «0» up — you need to find the most extreme currency line from the bottom. Of these two currencies, we make up a currency pair for trading, in which we buy a growing currency. The profit is fixed at the moment when the lines of the selected currencies intersect in the opposite direction:
— if the currency line has crossed the level «0» down — you need to find the most extreme currency line from the top. Of these two currencies, we make up a currency pair for trading, in which we sell the falling currency. The profit is fixed at the moment when the lines of the selected currencies intersect in the opposite direction:
Also, it is recommended to make of two deals: the first deal is better to close at the moment of crossing the currency lines in the opposite direction, the second trade — by Take Profit (how to calculate its size I will write below).
Trading signal #3 – The intersection of the lines of the currencies
By tracking the dynamics of a particular currency line in the market basket and its intersection with other lines, you will be able to determine the beginning and end of the trend on specific currency pairs.
Example — crossing of GBP and JPY lines (GBP / JPY currency pair)
• If the GBP line crossed the JPY line up – then GBPJPY buy
• If the GBP line crossed the JPY line down – then GBPJPY sell
After almost every intersection on the chart is observed for a long period of growth or falling quotations, which is sufficient for fixing the profit:
Trading signal #4 – crossing overbought / oversold levels
On the block «Currency Trend Meter» you can independently apply overbought/oversold levels. Touching the currency lines of these levels means a significant weakening or strengthening of a particular currency in the market basket.
The specified signal can be used in a pair with a signal about the intersection of currency lines with each other in approximately the following algorithm:
Waiting for the moment of crossing the lines of currencies between themselves.
We make a deal after the line of one of the currencies has reached the level of overbought/oversold.
Example:
This approach allows us to partially exclude from trading false intersections between lines. That is, to make deals only when after crossing the trend lines on the currency pair really began to accelerate
Example-filtered trade after false crossing of lines:
Block «Currency Impulse Meter»
This technical indicator allows you to determine the moment of occurrence in the market basket of short-term spikes in demand and supply for a particular currency. That is, the moment when a certain currency is actively buying or selling against other market currencies.
Each currency on the indicator scale has its own line painted in a certain color. If the line of the currency started to grow a specified currency started to use active demand. That is, we can make a deal to buy it against other market currencies.
Accordingly, if the currency line is actively falling – we can sell this currency against other market currencies.
Trading signal #1 — touch the currency line overbought/oversold levels
Wait for the moment when the line of one of the currencies has reached the level of oversold or overbought
If the line has reached the overbought level, then we buy this currency by selling another currency, the line of which is the most extreme in the opposite area of the indicator (the strongest signal is when both currency lines have reached the overbought/oversold levels) ATTENTION-manually select the signal level. it is different for each timeframe:
You can close such a deal using the Take Profit level or when the lines of the respective currencies cross back:
Also, you can close such a deal at the reverse intersection of the lines of the corresponding currencies on the indicator «Currency Trend Meter»:
In some cases, this closure may be delayed. However, there are often price impulses, which are the starting points for the emergence of long-term market trends. In this case, you can catch a long trend and a good profit:
If the price has not reached Take Profit-when and how to close trades?!
As you understand, the trades opened with the help of this indicator should be closed at the reverse intersection of the lines. Thus, instead of a fixed Stop Loss order, it is recommended to use the algorithm of closing trades at
the reverse intersection of currency lines. That is, if you made a deal to buy and before reaching the Take Profit level the currency lines crossed in the opposite direction, then such a deal must be closed:
Using this option works much better than the classic Stop Loss orders. In reality, the reverse crossing of the lines occurs at the moment when the transaction is either in a positive area or with a small minus.
How to set Take Profit
To set the Take Profit level I use the PRICE ACTION FIBO CHANNEL indicator.
PRICE ACTION FIBO CHANNEL
This is a channel indicator, which places a channel on the price chart, the width of which depends on the range of the price movement of the currency pair for a certain period.
Thus, with the help of this indicator, I effectively determine the potential of further price movement in points.
In order to determine the Take Profit level for a particular currency pair, set the indicator PRICE ACTION FIBO CHANNEL on charts. After that, determine the distance between the two extreme lines of the price channel:
• Take Profit 1 is half the channel distance.
• Take Profit 2 is the whole distance between the extreme lines of the channel.
Don’t underestimate the importance of this indicator. If you decide to use a fixed TP size for all currency pairs, this will be very wrong approach. For one currency pair the Take Profit, for example, with a size of 1000 pips may not enough, but for other is too much. Thus, for different currency pairs, we must use different Take Profit levels, which depend on the level of average volatility. For example, for GBPCAD I use Take Profit 1100 pips, and for EURGBP 300 pips:
