A buy trade can also be opened when price touches the 100 Simple moving
average, provided it’s not very far from the 200 SMA. Normally the 100
SMA will be within the 20 pips range of the 200 SMA.
Sell Signal – Forex Downtrend/Bearish Market
To generate Forex sell (short signals) using the 20 pips moving average
Forex trading strategy, we shall also use the 1hour and 15 minute chart
On the 1 hour chart time-frame, the price should be below both the 100
and 200 simple moving average. We then move to the 15 minute chart
time-frame to generate a Trading Signal.
On 15 minute chart, when price reaches the 20 pips range below the 200
SMA, we open a sell trade and place a stop loss 30 pips above the 200
simple moving average.
With this method price will generally bounce of these levels because
many traders watch these levels, and open similar trades at around the
These levels act as short term resistance or support levels within the currency price charts.
Profit Taking level For This Trading Strategy
With this trading strategy the price will bounce and make a move in the
direction of the original Forex trend. This move will range from 70 -
The best profit taking level would therefore be considered to be 80 pips from the 200 simple moving average.
Forum on trading, automated trading systems and testing trading strategies
newdigital, 2014.06.05 09:41
USDCHF Breakout Hindered by 200-Day Moving Average (adapted from dailyfx article)
The 200-Day Simple Moving Average
The 200-Day Simple Moving Average is one of the most popular indicators
in the world. When price breaks through a 200 MA on a daily chart, it
can often be seen as a topic of conversation on financial news stations,
websites and newspapers.
It is primarily used to give traders and investors an overall sense of how strong or weak a currency pair is.
Typically, when a currency pair’s price falls below the 200 Day MA, it
is a sign of weakness with a potential for further price decline. And
when a currency pair’s price breaks above the 200 Day MA, it is a sign
of strength with a potential for further price increases.The chart above shows the recent price action surrounding the 200 Day
MA. We see a large run up in price breaking through multiple resistance
levels until it met this powerful MA line. We have had 6 consecutive
days where price has temporarily broke through the 200 Day MA or price
has come within 10 pips of the line before retreating lower. So this
level is acting as strong resistance.
If price were to remain below the MA, it could propel it lower back into
the pair’s price channel. However, a breakout to the upside could add
yet another reason to buy the USDCHF. Until we witness a larger price
move, we are in a state of limbo.