USDJPY 4H SAR/MA PULLBACK STRATEGY
Price previous Bearish SAR MA Setup.
1 - SAR above price showing Bearish move.
2 - Green 20 SMA crosses below Red 40 SMA confirming Bearish move.
Now price shows a Bullish Pullback with SAR below the price.
Showing Bullish pullback.
Waiting for a Bearish continuation move.
MA already crossed over showing Bearish bias
ENTER WHEN: SAR closes above price.
TP when SAR closes below price.
Find your own SL.
Rule #1- Apply Parabolic SAR system and Moving Average indicators to chart.
Rule #2- The Parabolic SAR Indicator must change to be above price candle.
Notice how the dots were below the price. The parabolic stop and reversal (SAR) formula showed us that the price stalled out for a few hours and then we are waiting for the dot to appear above the candle.
This is a sign that a reversal may be forming.
Rule #3- Another element that must occur is the moving averages must cross over.
In a short trade, the 20 period moving average will cross and go below the 40 periods moving average.
So now the 20 period moving average is below the 40 period moving average. However, something occurred that is notable. The dot then appeared below the price candle.
Since the moving averages are telling us that a downtrend is most likely going to occur, we will wait until the dot appears again above price candle to validate this reversal and enter a trade.
Rule #4- Parabolic SAR dot must be above price candle AND moving averages cross to where the 20 period MA is below the 40 period MA.
Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as there are both elements, the entry criteria are met.
Rule #5- Enter The Next Price Candle…
Enter (SELL) the very next price candle after the dot appears above the candle. Waiting for one candle after makes sense because this proves to us that this reversal is strong. The moving averages are supporting the downtrend + the dot is signifying a downtrend.
Rule #6- Stop loss / Take Profit
The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss. In our example, a stop loss was placed 40 pips from entry.
Your exit criteria are when the 20 and 40-period lines cross over again. OR when the dot reverses appears at the bottom of the candle.
This trade would have been a +203 pip profit using the MA cross exit approach. Not too bad.
Some will get out of the trade when the dot appears below the price candle. If that was the case, in this example, you would have got +32 pips instead. Still not bad, but +203 pips sounds a lot better.
So basically you can use either exit strategy. This trade the downtrend was very strong so we stayed in until the MA lines cross. Determine where you are in a trade. If you are up +100 pips and the dot changes to reversal consider getting out then and taking your profit.
Note** Scalpers should not be using a 30 to 50 pip stop with this strategy. Consider your rules and adjust accordingly. A 5-10 pip stop may be more appropriate on that low of a time frame.
Rules for Long Entry.
Rule #1- Apply indicators to chart
Rule #2- Dot must change to be below price candle. This is a sign that a reversal may be happening.
Rule #3– Another element that must occur is the moving averages must cross over.
In a long trade, the 40 period moving average will cross and go below the 20 period moving average.
Rule #4- Dot must be below price candle AND moving averages cross to where 20 period MA is above 40 period MA.
Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as we have both elements the entry criteria is met.
Rule #5- Enter Next Price Candle. Enter the very next price candle after the dot appears below candle + MA lines cross and 20 period MA is above 40 period.
Rule #6- Stop loss / Take Profit
The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss.
1 - SAR above price showing Bearish move.
2 - Green 20 SMA crosses below Red 40 SMA confirming Bearish move.
Now price shows a Bullish Pullback with SAR below the price.
Showing Bullish pullback.
Waiting for a Bearish continuation move.
MA already crossed over showing Bearish bias
ENTER WHEN: SAR closes above price.
TP when SAR closes below price.
Find your own SL.
Rule #1- Apply Parabolic SAR system and Moving Average indicators to chart.
Rule #2- The Parabolic SAR Indicator must change to be above price candle.
Notice how the dots were below the price. The parabolic stop and reversal (SAR) formula showed us that the price stalled out for a few hours and then we are waiting for the dot to appear above the candle.
This is a sign that a reversal may be forming.
Rule #3- Another element that must occur is the moving averages must cross over.
In a short trade, the 20 period moving average will cross and go below the 40 periods moving average.
So now the 20 period moving average is below the 40 period moving average. However, something occurred that is notable. The dot then appeared below the price candle.
Since the moving averages are telling us that a downtrend is most likely going to occur, we will wait until the dot appears again above price candle to validate this reversal and enter a trade.
Rule #4- Parabolic SAR dot must be above price candle AND moving averages cross to where the 20 period MA is below the 40 period MA.
Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as there are both elements, the entry criteria are met.
Rule #5- Enter The Next Price Candle…
Enter (SELL) the very next price candle after the dot appears above the candle. Waiting for one candle after makes sense because this proves to us that this reversal is strong. The moving averages are supporting the downtrend + the dot is signifying a downtrend.
Rule #6- Stop loss / Take Profit
The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss. In our example, a stop loss was placed 40 pips from entry.
Your exit criteria are when the 20 and 40-period lines cross over again. OR when the dot reverses appears at the bottom of the candle.
This trade would have been a +203 pip profit using the MA cross exit approach. Not too bad.
Some will get out of the trade when the dot appears below the price candle. If that was the case, in this example, you would have got +32 pips instead. Still not bad, but +203 pips sounds a lot better.
So basically you can use either exit strategy. This trade the downtrend was very strong so we stayed in until the MA lines cross. Determine where you are in a trade. If you are up +100 pips and the dot changes to reversal consider getting out then and taking your profit.
Note** Scalpers should not be using a 30 to 50 pip stop with this strategy. Consider your rules and adjust accordingly. A 5-10 pip stop may be more appropriate on that low of a time frame.
Rules for Long Entry.
Rule #1- Apply indicators to chart
Rule #2- Dot must change to be below price candle. This is a sign that a reversal may be happening.
Rule #3– Another element that must occur is the moving averages must cross over.
In a long trade, the 40 period moving average will cross and go below the 20 period moving average.
Rule #4- Dot must be below price candle AND moving averages cross to where 20 period MA is above 40 period MA.
Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as we have both elements the entry criteria is met.
Rule #5- Enter Next Price Candle. Enter the very next price candle after the dot appears below candle + MA lines cross and 20 period MA is above 40 period.
Rule #6- Stop loss / Take Profit
The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss.
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