Simple Moving Average ADX forex strategy

The 100 period simple moving average - ADX forex strategy is used to buy dips in up trending currency markets while selling rallies in down trending markets. The overall trend is determined by a 100 period MA. We consider the market bullish if price is trading above the 100 MA while bearish if price is trading below the 100MA. We look for buy signals ( ignore all sell signals) when price is considered bullish, we look for sell signals (ignore all buy signals) in a bearish market.

Recommended time frames: 1 hour and above

Trading rules to enter the market

Buy order

> Price above 100 simple moving average
> DI+ crosses DI- from below
> ADX at or above 25 value (indicates trending market)
> Enter long trade
> Set stop 3 pips below the most recent level of support
> Trade objective: 1:2 risk to reward (min obj. should be 50 pips)

Sell order

> Price below 100 simple moving average
> DI- crosses DI+ from below
> ADX at or above 25 value (indicates trending market)
> Enter short trade
> Set stop 3 pips above the most recent level of resistance
> Trade objective: 1:2 risk to reward (min obj. should be 50 pips)

Trading example: Let's have a look at the Pound/Dollar 1 hour chart below

GBP/USD Buy Trade Explanation

• Price is bullish - trading above the 100 simple moving average.
• The black circles indicate the time to go long in the market @ 1.5475. (ADX>25, DI+ crosses DI-)
• Stop loss is set 3 pips below the most recent level of support @ 1.5452
• Total trading risk: 23 pips. (entry price - stop loss price)
• Minimum trade objective: 50 pips