The forex market is one of the most turbulent markets in trading. New traders who would dive in head first trading forex would quickly discover that trading in this market is not as easy as they think. The forex market is often very chaotic. It moves erratically up and down the chart with seemingly no clear direction. But every now and then, the forex market would present an opportunity. The market would show signs that is ready to rally or dive. These moves often result in trends that would last long enough for traders to profit substantially more than they would be risking. However, to the untrained eye, these clues of an impending trend is quite difficult to decipher.
There are many ways to determine that the market is about to trend. One of the best ways to anticipate a trend is by identifying convergences. The Awesome Oscillator Cloud Forex Trading Strategy helps traders identify convergences that have a high probability of resulting in a trend.
Table of Contents
The Awesome Oscillator is a momentum based oscillating indicator which is used to indicate trend direction.
The concept behind this indicator is quite simple, however even with its simplicity, it is also very effective. It computes for the difference between two Simple Moving Averages (SMA). However, the moving average is not computed based on the close of the candle but instead on its median. The difference between the moving averages are then plotted as a histogram bar on a separate window. Positive histogram bars indicate a bullish trend while negative histogram bars indicate a bearish trend. A shorter-term indication would be the rising and falling of the histograms. This is useful when trying to identify peaks and troughs especially when trading divergences.
Ichimoku Cloud – Kumo
The Ichimoku Cloud indicator is a technical indicator which is used to determine trend direction based on momentum. It determines the short-term, mid-term and long-term trend all at the same time based on a variety of modified moving averages and price action. It has five lines in total.
The Chikou Span or Lagging Span is in fact a lagging version of price action. It is intended to shadow price action based on the close of each candle, while being plotted a certain distance behind it. The Tenkan-sen or the Conversion Line is a moving average based on the median of each candle and represents the short-term trend. The Kijun-sen is represents the mid-term trend and is also based on the median of each candle for a longer-period. The Senkou Span A or Leading Span A is the average of the Tenkan-sen and Kijun-sen while Senkou Span B is an average of the median for a an even longer period and is plotted ahead of price action.
The Kumo or Cloud is composed of the Senkou Span A and Senkou Span B, and represents the long-term trend. The long-term trend is determined based on the location of Senkou Span A in relation to Senkou Span B. If the Senkou Span A is above Senkou Span B, the market is considered bullish. If it is stacked inversely, then the market is considered bearish. The long-term trend is considered to have reversed whenever the two lines crossover.
The Awesome Oscillator Cloud Forex Trading Strategy is based on the confluence of the Awesome Oscillator and the Kumo of the Ichimoku Cloud indicator. These indicators are based on crossovers of moving averages based on the median and represents a long-term trend.
Although these indicators’ entry signals do not usually converge, signals that occur close to each other tend to have a high probability of resulting in a trend.
Trade signals are based on the crossing over of the Awesome Oscillator’s histograms over the midline and the crossing over of the lines of the Kumo.
Timeframe: 4-hour and daily charts
Currency Pairs: major and minor pairs
Trading Session: Tokyo, London and New York
Buy Trade Setup
- Senkou Span A should cross above Senkou Span B indicating a bullish long-term trend crossover based on the Kumo
- The histograms of the Awesome Oscillator should cross above the midline indicating a bullish trend
- These entry signals should occur somewhat close to each other
- Enter a buy order on the confluence of the above conditions
- Set the stop loss on the support level below the entry candle
- Close the trade as soon as the histograms become negative
Sell Trade Setup
- Senkou Span A should cross below Senkou Span B indicating a bearish long-term trend crossover based on the Kumo
- The histograms of the Awesome Oscillator should cross below the midline indicating a bearish trend
- These entry signals should occur somewhat close to each other
- Enter a sell order on the confluence of the above conditions
- Set the stop loss on the resistance level above the entry candle
- Close the trade as soon as the histograms become positive
This trading strategy is a long-term trend trading strategy. As such, it is intended to trade on longer-term trades which often result to bigger wins based on pips. Traders could hold trades quite longer swing trading based on this strategy. Trades could be held for several days allowing the market to trend for several pips.
Traders who would use this strategy should combine it with excellent trade management skills. They should learn to move the stop loss to breakeven at the right time and trail it at an optimum distance.
There will be instances when the reversal signal of the Awesome Oscillator would occur later than the price action would. In order to compensate for this, traders could opt to close the trade as soon as a candle closes inside the Kumo (Cloud).
This strategy is a working strategy which could provide steady returns if used correctly.
Forex Trading Strategies Installation Instructions
Awesome Oscillator Cloud Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
Awesome Oscillator Cloud Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which 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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How to install Awesome Oscillator Cloud Forex Trading Strategy?
- Download Awesome Oscillator Cloud 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 want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select Awesome Oscillator Cloud Forex Trading Strategy
- You will see Awesome Oscillator Cloud Forex Trading Strategy is available on your Chart
*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.
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