I would like to talk about M&W Patterns (old fashioned Patterns) that are constantly drawn on the Forex market. It happens on a regular basis on a low time frame like (M30 & H1). Patterns on higher TF are more reliable but it doesn’t happen that much (H4 & D1).
M&W Patterns are repetitive structure price left on the cycle move. An “M” Pattern is the way the market is producing a double bottom (creating a support zone) that could be interesting to look at. A Long opportunity can be detected there. On the opposite side, when the market (chart) draws a “W” pattern, it creates a resistance level which could be interesting to look for short opportunities. In the video, I show the W that happened. I entered short on the top of the W.
Since I got interested in these patterns, I have noticed a particular point where the market could also react. It’s in fact the Kel level to watch for further direction or time to reverse the initial position. I called it “CP” Center Point. It’s the middle price level of the structure of the pattern. In the video, I placed Takeprofit on that “CP” level. Another great thing about this strategy is Risk/Reward. SL is always tight as we are supposed to enter on support or resistance… if the market goes into the opposite of the trade and so breaking out M base or W roof… it is pointless to keep alive the position.
I have created the M&W Pattern Indicator for MT4, so it draws the patterns on your chart and you get real-time signals. The indicator can be downloaded for free until end of December 2016 on http://www.forexfactory.com/showthread.php?t=541364.
Download the last version on Post 1. In August the last free version will be released.
It also includes CSA (Currency Strenght Analyser): A powerful tool that indicates in realtime the strongest currency vs the weakest currency. The total points are great to get an idea of how the global market is volatile.
- Minimum 60 to 80: Market is really quiet
- 80 to 120: Could be not o quiet for some pairs
- 120 to 170: Market is volatile (High news impacts market
- over 170 to around 200 (Maximum saw so far): Global market is impacted and some pairs are really extended… huge spikes. Don’t go against the massive trend.
There are a lot of examples are presented into the thread, also on the blog (refer post 1)
Only set CSA = true for 1 chart only while using the Indicator.
I hope this indicator will help you to filter trades while using your own trading style.