FX Pullback Reversals Indicator

FX pullback Reversal Indicator is a trading system based on multiple moving averages. As the name suggests this trading indicator helps traders to trade high probability pullback reversal areas.

FX pullback Reversals Indicator Overview

In this trading System, Moving averages are applied on higher time frames and plotted on a lower time frame to identify the end of a pullback with deadly accuracy. Let’s try to understand the working of this system with few examples.

FX pullback Reversals Indicator Overview

Moving average is simply a technical analysis tool that calculates the average of price data and plots a constantly updated average price on the chart. When price moves above the moving average and shorter time frame moving average is above the longer time frame moving average then the trend is up.

If the price moves below the moving average and the shorter time frame moving average is below the longer time frame moving average then there is a downtrend in the market. The slope of the moving average also helps to determine the strength of the ongoing trend.

Also Read: Sibbet Demand Index Divergence

FX pullback Reversals Indicator Explanation

The advancing phase, when price makes a higher high and higher low, is confirmed by upward sloping moving average . The declining phase, when price makes a lower high and lower low, is confirmed by downward sloping moving averages.

FX pullback Reversals Indicator Explanation

In Up trending market price take support near the moving average of the higher time frame and in the down-trending market price take resistance near the moving average of the higher time frame. traders should take entry near the support and resistance areas in the favor of the trend.

Moving average of 8 is used as short term moving average and average of 21 is used as longer period moving average. Both averages are applied on the 4h time frame chart and it can be used in any time frame lower than the four hours time frame.

Pullback Reversals: Buy conditions

FX pullback Reversals Buy Signals
  • 8 period moving averages is above the 21 period moving average.
  • Slope of both of the moving average is up.
  • Price takes support on any of the moving average.
  • Trades can use any candle patterns or trend lines to take entry.

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Pullback Reversals: Sell Conditions

FX pullback Reversals Sell Signals
  • 8 period moving average is below the 21 period moving average.
  • Slope of both of the moving average is down.
  • Price takes resistance on any of the moving average.
  • Trades can use any candle patterns or trend lines to take entry.
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I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

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