Here is a trading system that I have come across, I don’t know who the original creator is. It is a fairly easy system and has been fairly successful. This system can be used on any time frame but works best on 15 min charts.
This system is based on three indicators and Fibonacci lines.
Exponential Moving Average (period 21, high)
Exponential Moving Average (period 21, low)
Williams’ Percent Range (period 35, add -50 line)
Fibonacci Lines (instructions below)
Here is the template for MT4:
therightstuff.zip (668 Bytes)
Set up chart using the template above and then add Fibonacci Lines as per instructions below:
- Draw a Fibonacci retracement on the previous month’s data.
a. You can use the Daily or the Monthly chart.
b. On the Daily chart, start at the beginning of the previous month. The previous month’s data can be identified by the white vertical Period Separator lines on your chart. At this stage, all you need to do is identify where the previous month’s data begins and ends.
c. If the open at the beginning of the previous month is lower than the close at the end of the previous month draw your Fibonacci retracement starting from the low to the high.
d. If the open at the beginning of the previous month is higher than the close at the end of the previous month draw your Fibonacci retracement starting from the high to the low.
e. If you are using the Monthly chart simply look at the previous candle.
f. If it is a Bullish candle draw your Fibonacci retracement starting from the low to the high.
g. If it is a Bearish candle draw your Fibonacci retracement starting from the high to the low.
- Draw a Fibonacci retracement on the previous week’s data.
a. You can use the Weekly or the 4 Hour chart.
b. On the 4 Hour chart, start at the beginning of the previous week. The previous week’s data can be identified by the white vertical Period Separator lines on your chart. At this stage, all you need to do is identify where the previous month’s data begins and ends.
c. If the open at the beginning of the previous week is lower than the close at the end of the previous week draw your Fibonacci retracement starting from the low to the high.
d. If the open at the beginning of the previous week is higher than the close at the end of the previous week draw your Fibonacci retracement starting from the high to the low.
Or you could use the Weekly chart to insert the Fibonacci retracement instead.
e. If you are using the Weekly chart simply look at the previous candle.
f. If it is a Bullish candle draw your Fibonacci retracement starting from the low to the high.
g. If it is a Bearish candle draw your Fibonacci retracement starting from the high to the low.
h. The Fibonacci retracement on the Weekly chart does not require the 23.6 and 38.2 levels.
Entry Rules:
Go to the 15 Minute chart to identify an entry.
Long Entry:
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Wait for a candle to close above the 21 EMA of the Highs.
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As long as price remains above the 21 EMA of the Highs wait for a candle to close above any of the Fibonacci retracement levels.
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If both the conditions above are met and the Williams % R is above 50 enter a Buy trade at the open of the next candle.
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Place your stop loss 27 pips away from the Fibonacci level that was breached by the set up candle.
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Place your Take Profit 45 pips away from your entry price.
Short Entry:
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Wait for a candle to close below the 21 EMA of the Lows.
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As long as price remains below the 21 EMA of the Lows wait for a candle to close below any of the Fibonacci retracement levels.
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If both the conditions above are met and the Williams % R is below 50 enter a Sell trade at the open of the next candle.
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Place your stop loss 27 pips away from the Fibonacci level that was breached by the set up candle.
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Place your Take Profit 45 pips away from your entry price.
