FX TECHNICAL ANALYSIS
Moving Average as I found this to produce more consistent results. I have also altered the ATR moving average from 10 to 13. The reason here is that I am a firm believer
in Fibonacci numbers
and that gives an alternative in this situation of 8 or 13 and back testing has indicated that a consistent use of 13 provides the best results.
• Figure 1 is a USDCAD 2 Hourly Chart
The first signal here is given at point A where over two sessions the market fails at the top of the Keltner line. Prices come off from that point, offering ample profit opportunities and although the bulk of the trading lacks strong direction, it is trading gradually lower. Eventually at point B selling pressure accelerates and this is highlighted by the first close beneath the lower Keltner channel. Prices trend steadily lower with the absolute bottom marked by a sharp rejection of the lows. The subsequent bounce takes prices back inside the lower Keltner band marked, for our trading purposes, by the session close in side at point C. The market trades steadily higher from this point and the positive tone is confirmed/accelerated by the close above the top of the Keltner channel market by D. Further gains are seen but
these
are curtailed by two consecutive unchanged session closes – the
Figure 2 38 FX TRADER MAGAZINE October - December 2011 Figure 1 2nd of which (E) closes inside the
Keltner channel upper end and provides a sell signal. The resulting decline is not an extensive one however and it is the failure at the midpoint of the Keltner bands, F, which gives another intraday Buy signal. Finally this rise fails at the top of the channel with subsequent losses reinforcing the potential for a double top (E & G).
• Figure 2 is a GBPJPY 2 Hourly Chart.
Point A gives the initial signal here with a close above the top of the Keltner channel. This does result in gains but these turn out to be limited with candle price action giving some upside warning before prices plunge back inside the channel. For our trading perspective this change to a negative bias is
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