Set price action for scalper
The price action setting we are talking about here is the pin bar candle in a pullback trade. For this trading strategy, we use 2 more technical indicators, EMA 20, and EMA 50.
The EMA is in a trendsetting for us in a pullback trade. If the 20 EMA is above the 50 EMA, showing an uptrend, we prioritize buying. If the 20 EMA is below the 50 EMA, showing a downtrend, we prioritize selling.
Now we get to the most important part.
Trading principles
For buy orders
- Wait for the price to be above both EMAs where the 20 EMA is above the 50 EMA.
- The market has overcome the previous high to form a higher high.
- Wait for the price to return to one of the two EMAs.
- Look for a bullish pin bar candle that forms one of the two EMAs.
- Wait for the next candle to close above the highest price of the bullish pin bar candle.
- When there is a close above the high of the bullish pin bar candle, place a buy order above the bullish pin bar candle close price.
- Place your stop loss 5 pips from the lowest price of the bullish pin bar candle (about 10 pips).
- Set Take Profit at 1R or 1.5R.
Take a look at the AUDUSD M30 bracket example:
When the price formed a higher high than the previous one, the 20 EMA also crossed above the 50 EMA. We should now watch buy.
The price retraced back to the 20 EMA and formed a bullish pin bar candle there. This is a strong buy signal formed at the EMA. However, we need to wait for another close candle above the previous bullish pin bar candle to open a long position.
The picture above shows that the next candle broke the highest price of the bullish pin bar candle but finally closed a bearish pin bar candle. Many traders worry this is a counter-trend signal. So what should we do?
We should still execute the trade in accordance with our rules, placing the order according to the trade setup. As shown below:
The figure below is the follow-up chart, which shows the order took profit quickly.Trading principles for sell orders:
- Wait for the price to be below both the EMA and the 20 EMA below the 50 EMA.
- The market formed a lower bottom.
- Wait for the price to return to one of the two EMAs.
- Look for a bearish pin bar candle that formed at one of the two EMAs.
- Wait for the next candle to close below the bearish pin bar candle.
- When there is a closing candle below the bearish pin bar candle, place a sell order below the close of the bearish pin bar candle.
- Place your Stop Loss 5 pips from the highest price of the pin bar candle (about 10 pips).
- Set Take Profit at 1R or 1.5R.
See the example on the EURUSD M15 chart:
The bearish pin bar candlestick appears at the EMA when the 20 EMA cuts down to the 50 EMA, at the same time the price also creates a lower low.
The next bearish candle closes below the bearish pin bar candle, at which point we place a sell order. Stop loss and take profit as shown.
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