Trend reversal strategies, if done right, could produce the highest possible yields per trade. This is because trend reversals are often taken as the market reverses when it is the start of a new trend. Imagine being able to ride this new trend from beginning to end. This would mean that you are able to maximize the most amount of pips on that trend.
However, trend reversal setups could also be very difficult to anticipate. There are many possible scenarios that may occur as the previous trend starts to break down. Trend reversals are just one of them. The market may start to range right after the end of the previous trend. The market might also just have a deep pull back, which may seem like a trend reversal, then suddenly continue the direction of the prior trend.
For this reason, traders have been trying to find ways to objectively identify trend reversals without second guessing themselves.
One of the more popular types of trend reversal strategies are the moving average crossover strategies. Moving average crossover strategies assume that the trend is reversing whenever a moving average is crossing over another slower moving average line.
The moving average crossover strategy could be very effective when used with the right parameters. However, many traders have trouble trading this type of strategy because they follow the crossover setups blindly without any confirmation from other factors.
Table of Contents
Binary Comodos is a custom trend following technical indicator which was originally designed to be used in the binary market. However, if applied in other types of tradeable instrument such as the forex market, this indicator can still produce high probability trend reversal signals.
The Binary Comodos indicator is a trend reversal signal indicator which is based on an underlying Exponential Moving Average (EMA) line.
The indicator identifies trend reversals based on the underlying EMA lines and plots an arrow pointing the direction of the trend reversal.
Traders can use these arrows as trend reversal signals and can make buy or sell decisions based on it.
The Awesome Oscillator (AO) is one of the more popular oscillators used by profitable forex traders.
It is a simple technical indicator which is technically based on a moving average crossover.
The AO is computed by subtracting the 5-period Simple Moving Average (SMA) from the 34-period Simple Moving Average (SMA). However, instead of using the usual closing price of each candle, the AO uses the median of each bar. The resulting figures are then plotted as histogram bars.
The AO is unique because it can identify both trend direction and trend strength. Trend direction is based on whether the AO is positive or negative, while trend strength is identified based on the color of the bars.
Positive green bars indicate a strengthening bullish trend bias, while positive red bars indicate a weakening bullish bias. Negative red bars indicate a strengthening bearish bias, while negative green bars indicate a weakening bearish bias.
Traders can use the crossing of the AO bars from positive to negative and vice versa as a trend reversal signal. Traders can also use the AO as a trend bias filter and trade only according to the direction indicated by the AO bars.
Comodos Trend Forex Trading Strategy is a simple moving average crossover strategy based on the crossing over of the 10-period Exponential Moving Average (EMA) and the 100-period Exponential Moving Average (EMA).
The 10 EMA line is a very fast moving average line which responds to price action movements rapidly. This moving average line would represent the short-term trend which moves quite closely with the immediacy price action.
The 100 EMA line is a widely used long-term trend moving average line. Crossovers occurring between the 10 EMA line and the 100 EMA line could be interpreted as price action starting to cross over the long-term trend.
However, instead of trading every crossover setup that we are presented with, we will be looking for confluences based on the Awesome Oscillator and the Binary Comodos indicator.
The Awesome Oscillator should plot histogram bars that confirm the direction of the new trend.
The Binary Comodos indicator should plot an arrow pointing the direction of the new trend close to the point where the 10 EMA line and the 100 EMA line crosses over.
- 10 EMA
- 100 EMA
Preferred Time Frames: 30-minute, 1-hour and 4-hour charts
Currency Pairs: FX majors, minors and crosses
Trading Sessions: Tokyo, London and New York sessions
Buy Trade Setup
- The AO bars should shift to positive green bars.
- The 10 EMA line should cross above the 100 EMA line.
- The Binary Comodos indicator should plot an arrow pointing up.
- Enter a buy order on the confluence of these conditions.
- Set the stop loss on the support below the entry candle.
- Close the trade as soon as the AO plots a negative bar.
Sell Trade Setup
- The AO bars should shift to negative red bars.
- The 10 EMA line should cross below the 100 EMA line.
- The Binary Comodos indicator should plot an arrow pointing down.
- Enter a sell order on the confluence of these conditions.
- Set the stop loss on the resistance above the entry candle.
- Close the trade as soon as the AO plots a positive bar.
Not all moving average crossover setups are the same. Some tend to have a higher win probability than others.
This trading strategy improves the win probability of a simple moving average crossover setup by trading only on confluences of trend reversal signals coming from a couple of supplementary indicators, which are the Binary Comodos and the Awesome Oscillator.
Given the nature of both indicators, which are also based on moving average crossovers, it could be assumed that this strategy trades on confluences of trend reversal signals.
Forex Trading Strategies Installation Instructions
Comodos Trend 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.
Comodos Trend 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 Comodos Trend Forex Trading Strategy?
- Download Comodos 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 want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select Comodos Trend Forex Trading Strategy
- You will see Comodos Trend 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.
Click here below to download: