Today we will take a look at the simple and efficient trading strategy based on building the levels of support and resistance and on the highs and lows of the previous day. We will use pending orders Sell Limit and Buy Limit with the close stop losses and with the relative strength indicator RSI with the period 5.
Currency pairs: GBPUSD, EURUSD, AUDUSD, NZDUSD, USDJPY and USDCAD
Time frame: H1
Opening of the buy positions (Fig. 1)
First of all we shall determine the limits of the channel, within which the price of the currency pair has been on the previous day. After specifying the highs and the lows, we can place Sell Limit and Buy Limit at the distance of 6-7 points from the levels of support and resistance.
Stop Loss is placed at the distance of 30% from the width of the channel. Take Profit shall be placed at the distance of 6-7 points to the opposite limit of the channel; at the level of price activation of opposite pending order.
It is important that at the moment of the order activation, the RSI indicator shall be either in the oversell zone, or just leaving this zone. If this condition is not met, Sell Limit order should be cancelled.
Opening of the sell positions (Fig. 2)
Actions required for placing sell positions are similar to the actions described above, but in the opposite direction.
Sometimes, when the trend is very strong and the price is approaching the level of Take Profit, Stop-Loss can be placed at the distance of 20-30 points, if this allows us to gain high profit. However, in this case Take Profit shall be deleted. You can perform these actions, if you are in front of your computer. A significant advantage of this strategy is that you do not need to spend a lot of time at the computer. You can just spend 5-10 minutes in the morning to place pending orders. You shall also pay attention to the important macro-economic news, which can be released during the day.