Buy-Sell alert trend with 3 bar pullback Trading System is a unique strategy that uses some familiar tools like Fibo levels, Daily average range, and ZigZag to find out trading positions or generate buy or sell signals for the user. This trading setup works fine with every high volatility currency (may major or cross) pair at a time frame of 15 min or higher.
Buy-Sell alert trend with 3 bar pullback Trading System
This trading system is named, it creates buy or sell signals by the edge of the swing low and high (the most common three candlestick bar reversal pattern) and ZigZag edges, where it shows the daily range and Fibo support-resistance levels on the chart at the same time. With the risk ratio of 1:1.5, the entry, and exit levels of a volatile asset can easily be identified by this strategy.
The market creates waves and patterns when it moves higher or lower. Zig Zag pattern is a prevalent pattern that the market creates while driving; in other words, it’s just a combination of the edges of swing high and lows (from where the price starts to pull back).
Price used to take retracement while moving higher or lower. Fibonacci Series which is used in this trading system is a very useful and commonly used tool to find out the levels of a price retracement. 23.6%, 38.2%, 61.8%, and 78.6% are officially, and 50% are significant fib retracement levels where price bounces at a particular 1-100% level or range. In this strategy, Fibo levels are used to identify or show support and resistance levels with pivot points of a specific daily range (by calculating high and low).
This strategy uses a custom-made indicator named Buy-Sell Alert (5) and calculates 5 candle data (open, high, low, close) and dots above or below the candles (blue dots below the chart indicates buy signal and red dots above the chart means sell signal). Moreover, its TradingView version is also available in the TradingView Custom indicator section.
Let’s have a look at the Tools/ indicators and conditions for this strategy:
- Currency Pair: GBP/USD GBP/JPY EUR/JPY EUR/USD USD/JPY GBP/CHF (This trading system works with every pair but it’s better to use this strategy for volatile pairs for effective output)
- The time frame recommended for this strategy is 15 min or higher.
- Indicators:
- Zig Zag Pointer
- Buy-Sell Alert (5)
- FiboPivot
- 3 bar pullback
By applying all of these at the MetaTrader 4 platform, the chart will look like:
When price starts to turn upward after falling a certain level, ZigZag pointer buy arrow, Buy Sell Alert (5) Buy (blue) dots, and 3 bar pullback buy arrows start to appear on the chart. Fibo Pivot shows pivot point, support, and resistance levels for a specific range (High- Low) and daily range ( High, low, close ) at the chart’s upper left corner.
The FiboPivot indicator represents different levels (total of five)is in different colors where the red color indicates support lines (where support 3 is a lighter red than support 2 and 1), green color for resistance lines (where resistance 2 is more lightweight than resistance 1) and it has a blue color to show pivot point.
When the price swings high or low and starts to pull back or start to change its phase of the movement, this trading system will alert the implemented chart on the MetaTrader 4 platform for a different time frame.
Bullish Trading Strategy
After a swing low as soon as the market starts to shift starts to pull back, that’s where it starts to fulfill all bullish trading conditions and sends an alert.
Bullish Trading Conditions
- ZigZag pointer buys arrow appears.
- 3 Bar pullback buy arrow appears.
- Dot blue Buy-Sell (TF60) appears in the 15M TF.
Entry
When the price movement fulfills all buy conditions by this strategy and send an alert wait until the closing of the current candle and take buy entry at a suitable price.
Stop Loss
Stop loss will be placed for the buy entry at the low of 3 bar pullback. (where may blue dots appear).
Take Profit
This is a trading system with a 1:1.5 risk ratio. In other words, an entry with 30 pips Stop Loss would have a 45 pips profit target primarily, but for a 4-hour chart, different profit targets are recommended for specific pairs (50 pips EUR/USD, 45 pips USD/JPY, 70pips GBP/USD, EUR/JPY, 80pips GBP/JPY). Besides, opposite Zig Zag (sell) arrow or Buy-Sell red dots appear on chart or Fibo (support, resistance or pivot point) levels could also be used as an exit or take profit a buy entry.
Bearish Trading Strategy
After a swing high, as soon as the market starts to shift starts to pull back; that’s where it starts to fulfill all bearish trading conditions and sends an alert.
Bearish Trading Conditions
- Zig Zag pointer sell arrow appears.
- 3 Bar pullback sell arrow appears.
- Dot Red Buy-Sell (TF60) appears in the 15M TF.
Entry
When the price movement fulfills all sell conditions by this strategy and sends an alert wait until the closing of the current candle and take sell entry at a suitable price.
Stop Loss
Stop loss will be placed for the buy entry at the high of the 3 bar pullback. (where many red dots appears),
Take Profit
This is a trading system with a 1:1.5 risk ratio. In other words, an entry with 30 pips Stop Loss would have a 45 pips profit target primarily, but for a 4-hour chart, different profit targets are recommended for specific pairs (50 pips EUR/USD, 45 pips USD/JPY, 70pips GBP/USD, EUR/JPY, 80pips GBP/JPY). Also, opposite Zig Zag (buy) arrow or Buy-Sell blue dots appear on the chart or Fibo (support, resistance or pivot point) levels could also be used as an exit or take profit of the buy entry.
Conclusions
This is a unique trading system using different and effective mathematical terms and tools to identify trading positions at short time frame charts. Still, traders may be more cautious or avoid taking entries at major pairs using this strategy at the time of NFP, FED announcement, Interest Rate decisions or other fundamental events that might cause an unstable/volatile price movement. Besides, using a good broker is also important as some low-rated brokers might provide fake candles and prices to eat your profit.
