This strategy is an example of sharing classic basic indicators on the most optimal time frame for them. Here apply:
- MACD An oscillator type indicator, which is a histogram with a signal line. It is based on the difference between the exponential moving average with a longer period and with a shorter period, smoothed by another exponential moving average with a short period. (The exact formula is more complicated).
- MA (normal moving average).
You can add all these three indicators separately or use the template of the combined Hooyah Map indicator suggested by reference. At least this reduces the number of settings but also reduces the number of possible combinations.
Another indicator used separately is OsMA (Average Moving Oscillator). It is calculated as the difference between the MACD histogram and the signal line (moving average). The larger this difference, the longer the bar of the indicator, indicating an increase in trend strength. It is believed that OsMA is an analog of MACD, comparing this same MACD with ordinary MA. The indicator is complimentary, but sometimes far from superfluous.
Timeframe – Н1 or Н4, currency pair – EUR / USD. OsMA settings: fast ЕМА = 12, slow ЕМА = 26, MACD SMA = 9. Hooya Map settings are shown in the screenshot below.
Conditions for opening a long position:
- OsMA was below the zero levels for a long time, after which he drew the first column above zero.
- Hooyah Map on the same candle drew 3 green dots.
On the next candle, which goes after the signal, we open a deal. The target profit is 10-15 points, after which you can ensure the deal with trailing or close it.
The Hooyah Map indicator on the screen is represented by dots, each of the 3 horizontal lines of dots is the readings of three indicators, which in one way or another display the forecast of the price direction. Green is a buy signal, red is a sell signal. The task of the trader is to wait for the coincidence of one color and look at the confirming OsMA.
The screenshot shows that OsMA drew 6 columns below zero. On the first column above zero, we observe the simultaneous coincidence of the colors of the Hooyah Map. On the next candle, on which we are going to enter the market, the situation is similar.
Please note that after about 12 hours (the screen was taken from the hourly chart), the situation repeated and the signal turned out to be effective again.
Conditions for opening a short position:
- OsMA was for a long time above the zero levels, after which he drew the first column below zero.
- Hooyah Map on the same candle drew 3 red dots.
Entry and exit from the market are similar.
In this screenshot, the yellow circle shows a similar situation: for some time OsMA was above the zero levels, then the column below appeared. Notice that on the second column, Hooyah Map also drew three red dots. A less obvious situation (green circle) was a few hours earlier. On the first column below “0”, Hooyah Map showed three red dots, but on the second one of the dots turned green, leaving 4 candles. In this case, the trend turned out to be downward, but the candle following the signal went up.
Such discrepancies after all conditions on the signal candle coincide are an example of the fact that both at the time of opening a transaction and after the trader needs to follow the indicators and make a decision in the course of the action. But in general, the strategy is successful: it gives fairly accurate signals that are difficult to interpret in any other way. Although the risks, as in the example with the divergence of signals after the signal candle, still remain.
Do not enter the market on the first candle after the news, with a relatively large body of the signal candle, in the last 2 hours of Friday and the first 2 hours of Monday.