I like these because they are following price momentum. Plus they happen when price has energy and urgency: I hate getting into “smart” positions which then meander sideways for 8 days.
Two I like are very simple - D1 time-frame - bullish examples -
wait for the first close above the 20 and 50EMA’s, after a recent close below both: set a buy order at the high
wait for the first close above a swing high as recent as possible, but within the last 3 months: set a buy order at the high
Both these tend to have high win rates as long as you’re not overly ambitious with TP levels, or you’re prepared to set your SL to b/e asap. And the % price change in a short time can be very impressive.
But note that I ignore support and resistance levels: if you find these impacting your own tactics, then it would be wise I think to go back not less than 12 months to find them.
Consolidation zones within a trend usually signal a breakout in the direction of the trend. These zones will look like sideways price action, and can also appear as a “bear/bull flag”, which just means a short channel in the opposite direction of the trend, AKA: a pullback.
What I like about these is you can find them on any time-frame, even the 5 minute if you’re so inclined (I’m not). I usually look at 1H and 4H.
As with any strategy you need to be patient and wait for a break of the pattern before entering.
I watch the 28 leading pairs so these patterns appear regularly. But I avoid trading pairs simultaneously that would duplicate exposure, such as EUR/USD and USD/CHF, AUD and NZD pairs etc.
Also the patterns often appear in clusters, several on the same day - I try to avoid taking a bunch of entries based off the same pattern occurring on the same day on different pairs.
Keltner Channel - breakout
Setting 20 with a multiplier of 1
I only daytrade on 5mins/1min charts but Keltner Channel does work on higher timeframes.
A higher multiplier than 1 will give a wider channel and some traders range trade in the channel but I only strictly trend trade with a nice slope and outside the Keltner Channel.
I do use MAs - the most important by far is the 8EMA but I also 50SMA and 200SMA, these I only really use as possible support and resistance. I also love Daily Pivots.
I have no strict rule on first break, I just see how it’s going and get the feel of the market (hopefully ).
Sometimes I think it can be an error to jump in too quick.
A famous trend trader (can’t remember who, probably Ed Seykota) once said "Give me the middle 60% of a trend and you can have the first and last 20%.
Hey Johnny, why use EMAs and SMAs? Why not all EMAs. Don’t you want more weight to the current data, or are you specifically after the smoothing effect I guess of the SMAs?
@samewise
You have drawn my attention to something that I did forget to to mention in this strategy.
I happen to use IG platform and as you are probably aware most references to Keltner Channelsay that it uses 20EMA, however, IG’s Keltner uses 20 SMA and I do think that works well.
Anyway - to get back to the original point - I find the Keltner Channel a great volativity indicator for breakouts
thanks for the details. I looked at Keltner Channels along with every indicator under the sun back when I first started. I definitely didn’t use it long enough. I’ll give it another look!
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