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This system looks for inside day using bar charts on daily time frame or candlestick charts,
you look for a bar that is contained inside another bar or candle.
Once you find one you then look at the 21 (EMA)moving average and if this is pointing up then you should look to go long about 3 to 5 pips above the inside day any time in the future (obviously not months).
Stops will be about 50 points and limit will be 200 points depending on what currency pair your trading. This is used on currency and the opposite for downtrends when the moving average is pointing down.
The signal itself is determined by the moving average, if it's an inside bar sell then the 21 day moving average should be pointing down. If the moving average is pointing up then it's a false signal thus you would avoid this.
This systems basically trades in the direction of the trend and the trend is determined by the 21 day moving average.
Also the signal can come after a few days and not just the next day.
Please click on chart below for larger image
This system requires discipline and you should trade this on the popular currency pairs only.
The common and popular pairs are: AUD/USD, EUR/USD, GBP/USD, USD/CAD, USD/JPY, USD/CHF.
As you can see the pairs are focused on USD pairs, this is only due to the fact that it's the main currency of choice in the world and it's very well traded.
