Trend reversal strategies are a viable option to earn consistent profits from the forex market over the long term. It offers traders the chance to win big in a single trade. Trend reversal strategies are the form of strategies that would produce huge risk-reward ratios in a single trade. It’s because trend reversal strategies produce trade setups that try and catch a trade because it reverses while hoping to exit the trade near the top of the trend. Open ended trend reversal trade setups allow traders to have unlimited profit potential while at the identical time limiting the danger to a specific amount.
Nevertheless, trend reversals might be difficult to anticipate. It’s because at the top of a trend, the market may consolidate, reverse or proceed for an additional thrust. In other words, reversal is just one among a couple of possible scenarios.
Trend reversal traders who could turn in huge profits to cover the few losses every so often plus some more could turn in a consistent positive return at the top of a trading period. Trend reversal traders who could increase their win rate while maintaining the unlimited earning potential of a trend reversal setup could earn even higher returns.
On this strategy, we’ll examine the mixture of two high probability indications that would help traders earn higher yields with consistency using a trend reversal strategy.
Arrows and Curves
Arrows and Curves is a custom technical indicator which produces momentum-based signals.
This indicator plots a channel around price motion based on the worth extremes of the recent price movements. It plots a line above and below price motion enveloping price motion, forming the channel like structure.
It then detects strong momentum based on price motion pushing strongly and shutting beyond the range of the channel against the prior momentum indication. It then plots an arrow pointing the direction of the momentum reversal based on this.
A bullish momentum is indicated by a blue arrow pointing up, while a bearish momentum is indicated by a red arrow pointing down. Traders can use these arrows as an entry signal based on momentum reversals.
Relative Strength Index
The Relative Strength Index (RSI) is a widely used technical indicator. It’s a flexible oscillator which can assist traders discover trend, momentum and mean reversals.
The RSI plots a line which oscillates inside the range of 0 to 100, based on recent price movements. As such, its midline is at 50, which generally has a marker. An RSI line which is mostly above 50 indicates a bullish trend bias, while an RSI line which generally below 50 indicates a bearish trend bias.
It also typically has a marker at levels 30 and 70. An RSI line below 30 could indicate an oversold market condition, while an RSI line above 70 could indicate an overbought market condition. Each these conditions are prime for a mean reversal.
Then again, momentum traders may additionally discover an RSI line breaching above 70 as a sign of a bullish momentum, while an RSI line dropping below 30 as a sign of a bearish momentum.
The important thing in identifying momentum and a mean reversal might be based on the characteristics of price motion because the RSI line breaches these levels.
Many traders also add levels 45 and 55 to discover trends. An RSI line crossing above 55 might be used to substantiate a bullish trend reversal, while an RSI line crossing below 45 might be used to discover a bearish trend reversal. Inversely, level 45 also acts as a support level for RSI in a bullish trend, while level 55 also acts as a resistance level for RSI in a bearish trend.
Trading Strategy
Arrows and Curves RSI Trend Forex Trading Strategy is a straightforward trend reversal strategy which trades based on the confluence of a momentum reversal signal coming from the Arrows and Curves indicator, and the trend reversal signal coming from the RSI.
The Arrows and Curves indicator produces the primary signal based on a momentum reversal. The signals are based on the arrows plotted by the indicator.
The RSI should then confirm that the momentum reversal is indeed developing as a full-blown trend reversal. This is predicated on the RSI line crossing either level 45 or 55 depending on the direction of the reversal. If the trend continues, the identical levels should act as a support or resistance level depending on the direction of the trend.
Indicators:
- ArrowsAndCurves
- Relative Strength Index
Preferred Time Frames: 4-hour and every day charts (swing trading setups)
Currency Pairs: FX majors, minors and crosses
Trading Sessions: Tokyo, London and Latest York sessions
Buy Trade Setup
Entry
- The Arrows and Curves indicator should plot an arrow pointing up.
- The RSI line should breach above 55.
- Enter a buy order on the confirmation of those conditions.
Stop Loss
- Set the stop loss on the support level below the entry candle.
Exit
- Close the trade as soon because the Arrows and Curves indicator plots an arrow pointing down.
Sell Trade Setup
Entry
- The Arrows and Curves indicator should plot an arrow pointing down.
- The RSI line should drop below 45.
- Enter a sell order on the confirmation of those conditions.
Stop Loss
- Set the stop loss on the resistance level above the entry candle.
Exit
- Close the trade as soon because the Arrows and Curves indicator plots an arrow pointing up.
Conclusion
This trading strategy is a straightforward trend reversal strategy which makes use of two high probability reversal indications. The Arrows and Curves being a reversal based on momentum, while the RSI being a trend reversal indication based on an oscillator.
The 2 indicators act as supplementary indicators which may produce high probability trade setups in comparison with most trend reversal setups.
There might be times when minor losses could be incurred using this strategy. There may even be times when price wouldn’t push through long enough on a trend leading to a small win. Nevertheless, there would even be scenarios wherein the momentum reversal would end in a protracted trend. These trends produce high returns which should help traders grow to be consistently profitable over the long term.
Forex Trading Strategies Installation Instructions
Arrows and Curves RSI Trend Forex Trading Strategy is a mixture of Metatrader 4 (MT4) indicator(s) and template.
The essence of this forex strategy is to remodel the accrued history data and trading signals.
Arrows and Curves RSI Trend Forex Trading Strategy provides a chance to detect various peculiarities and patterns in price dynamics that are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust this strategy accordingly.
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Learn how to install Arrows and Curves RSI Trend Forex Trading Strategy?
- Download Arrows and Curves RSI Trend Forex Trading Strategy.zip
- *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you ought to test your forex strategy
- Right click in your trading chart and hover on “Template”
- Move right to pick Arrows and Curves RSI Trend Forex Trading Strategy
- You will note Arrows and Curves RSI Trend Forex Trading Strategy is accessible in your Chart
*Note: Not all forex strategies include mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.
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