Time frame : 15mins and above
Indicator : Stochastic Oscillator (Settings : 5, 3, 3)
Description : The stochastic oscillator is a good indicator to use to see if the market is oversold or overbought. But it cannot be used alone. To accompany it, I am showing you how you can use Exhaustion Candles to supplement this trading style.
For a Long (Buy) Trade :
- Stochastic oscillator must be in oversold territory (if its slightly above it, that's fine)
- Market should have a nice downtrend at that moment
- Exhaustion Candle should form
- Take a long (buy) at the opening of the next candle
- Stops should be placed 5 pips below the low of the exhaustion candle
- Make sure to trail your stop
For a Short (Sell) Trade :
- Stochastic oscillator must be in overbought territory (if its slightly below it, that's fine)
- Market should have a nice uptrend at that moment
- Exhaustion Candle should form
- Take a short (sell) at the opening of the next candle
- Stops should be placed 5 pips above the high of the exhaustion candle
- Make sure to trail your stops
Example : Long Position
Forex system - The Oversold Overbought Exhaustion
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Example 2 : Long Position
Example 3 : Short Position
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