Good morning everyone!
@Drekieyja thanks for the thoughts! I am going to test both the RSI and the Stochastic. I use a bit different settings for RSI than the 14-period default setting. I use a 7 period instead so it moves a bit faster.
This morning I sat down with my morning coffee to see if I could test this strategy a bit. Being a computer programmer, my first thought was to see if I could automate the strategy. I did some a few quick Google searches, and found that while my eyes can see the pattern easily it would be a non-trivial matter to teach a computer how to do it.
So I figure I will just manually backtest. I loaded up the EUR/USD 240-minute chart with five years of data in my NinjaTrader and I immediately hit a form of paralysis. My brain just locks right up. Pathetic, right? I hit the same problem that I have trading harmonic patterns, and that is identifying the proper swing highs and swing lows.
On top of that, I have no idea where to take profits in my trades. Stops are fairly easy as I just plan on placing them at a Fibonacci level beyond the previous swing point. For example, if I am trading a downtrend, then I will take a Fibonacci extension from the previous swing low to the prior swing high and back to the swing low, then set my stop to the 113 level.
Profit targets are a bit tricker. I think just to keep moving forward I will set my profit target at a 127 extension of the previous move in the trend that matches the direction of my trade.
The next question is do I want to do a one target trade or a two target trade? The one target trade would be easier to manage as I can just set my targets and stops on trade entry, but a two target trade might allow me to stick with winning trades longer.
Anyway, I need to run some errands and hit the gym, and then come back to try and get some backtesting done.