A simple and effective short-term strategy which is relying on the concept that the price action is likely to reverse once it exceeds the previous highs / lows in the observed period. The temple strategy is trading EUR/USD pair.
Short-term strategy using 5-min and 15-min bars. The strategy will on average generate around 10 traders per day.
High Low indicator is the level of price highs and lows in the chosen period. In strategy’s default settings the period is five 15-minute bars.
The strategy will open a long positions if the low of the current 5-minute bar will cross from above to below the low of the High Low indicator 2 bars ago.
Conversely, the short positions will be opened, if the current 5-minute bar will cross from below to above the high of the High Low indicator 2 bars ago.
The strategy’s stop-loss is set at 49 pips and the take-profit at 110 pips.
If the signal in the opposite direction will be generated, the position will be reversed.
Additional signals in the same direction will be ignored.
The strategy has a relatively high accuracy – in the long term the ratio of winning to losing trades is likely to be higher than 2:1, although the average losing trades might be up to 50% larger than average winning trades.
Since this strategy relies on price reversing when it reaches its previous levels, it will perform best when the market is trading within range. The strategy will be less effective if the market is trending in either direction for the prolonged period.