This strategy is used for trendy markets. The major targets of this strategy are the trend reversal at the time of strongly trendy markets. This technique is also used for currency trading which shows very rapid reversal trends.
The time frame mostly used in this technique is hourly based or 4 hour time frame. The accuracy of this technique increases in higher time frames although they don’t show rapid signal in it.
There are following three indicators used in this technique.
1. Bollinger Bands,
2. Stochastic Oscillators and
3. Auto pivot point calculator to plot pivot points, resistance and support levels.
If you want to understand this strategy you need to have a basic concept of intradacy candle.
You must keep in mind that you have to go long if the intradacy candle cut out the lower Bollinger-band. You must place the market buy order during the opening time of next candle. The signals will reinforce in the situations when the market has a support level.
You must keep in mind that you have to go short if the intradacy candle cut out the upper Bollinger-band. You must place the market sell order during the opening time of next candle. The signals will strengthen in the situations when the market has a support level.
If you are dealing with long orders then the SL should 20 pips less than the minimum point of the longer candle and if it is short order the SL should be 20 pips above.