When price closed at the 50 MA on the 4 hour, price ALSO closed on the 1 hour 200 MA matching scenario (B). Next is the Moving Average Correlation between timeframes. I would not look for a short IF the 20 MA is above the 50 MA. < This is how we would expect these 2 MAs to be positioned. In the above chart, the 50 MA is above the 20 MA and price is in a downtrend.
I will either get in an engulfing candle on the 50 MA or the 200 MA. Remember, the moving averages must be ALSO positioned correctly.įrom here, I wait for a candle stick confirmation. I also check the daily, but I find more setups with the above for IF, THEN criteria. These are the primary correlations I use to trade. Each week there are at least 4-6 setups.Ī) IF Price closes on the 4 hour 20 MA, I need price to also close on the 50 MA on the 1 hour, and the 200 MA on the 15 min.ī) IF Price closes on the 4 hour 50 MA, I need price to also close on the 200 MA on the 1 hour.Ĭ) IF Price closes on the 1 hour 20 MA, I need price to close on the 15 min 50 MA, and 5 min 200 MA.ĭ) IF Price closes on the 1 hour 50 MA, I need price to close on the 15 min 200 MA. If I see a pair closing on a moving average, I will flag it and set an alert above the high (buy) or low (short) on the timeframe where the 200 MA resides.
In using this strategy, I review all major and minor forex pairs including indices and metals. This is my Moving Average Correlation Strategy The daily chart on the top left, 4 hour on the top right, 1 hour on the bottom left, and 15 min on the bottom right. Not only does the candle have to close on the 20 or 50 MA but the moving averages must be positioned correctly. The 20 MA (blue), 50 MA (red) and the 200 MA ( gold ).
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