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The folding rule - an effective Forex pattern
Catching reversals is not like all the traders, but to catch a nascent market price movement few who refused. To search for the reversal of market trends, a large number of indicators and patterns, one of which will be discussed.
Forex pattern "folding meter" refers to the category topping builds. This is a simple tool that allows to trade in the beginning of a new trend.
Why such a strange name? The easiest way to demonstrate how looks the graph below to explain the name. Pattern folding meter consists of three lines which are conducted through the local maximums or minimums:
Since this is a reversal pattern, the trend lines will be conducted through the local minimums and in the case of reducing the price of the course is through local maxima.
Pattern folding meter: rules of construction
This pattern can be used on any timeframe but when working on the M1, in my opinion, it will be small due to the small size of transactions in points. Most often it is the graphical construction is used on M15-H1, if we take the higher TF, it will be a medium-or even long-term trading.
For starters, it turns out the market direction, and the flat doesn't suit us, and will need just a trend on the chart (ascending or descending). Two of the extremum is found, a line that will be marked with 1 (points A and B) :
Through B and the next extremum is another line that should have a greater slope than the previous one (for example, with a rising trend). We denote the number 2, and she held on to chart through B and C.
The folding may leave only in case if after the point C the next local minimum is even higher. Then we spend 3 straight through C & E, which we will need to find the point of entry into the market.
Now we have three lines connecting every two subsequent local minimum if it were on a downward trend, the construction would be carried out through local maxima. We next turn to the terms and conditions and closing positions.
Pattern folding meter: rules of trading
So, in our example, there is a growing trend, and we drew lines through the local minimums. After determining the lines on a chart 3 we are ready to open a position. As soon as the next candle closes under 3, we conclude a deal to sell.
I recommend to read more here about these two Forex patterns:
• Doji
• Butterfly Gartley
On the graph, this point is marked with the letter F, and it is just on the closing price of the candle, through 3 from top to bottom. Next, we will need to take the rules out of position, and we are talking about fixing of damages and the closure of a profit. We start with setting a stop loss order.
Stop loss have a folding ruler exhibited a few pips above the last local maximum that was observed before the breakdown 3 lines. In the above illustration the location of the order is indicated by the horizontal red line at the top of the chart.
Profits will be recorded when the market price of the first line drawn through A and B. As You can see, it is sloping, and this means that the conditional take profit will gradually go to meet our deal. If you try to set take profit order its value will have to change in the smaller side because of the slope of the line 1.
Forex-the pattern of the folding is a good way in time to catch the market reversal. At the same time, this build don't get to see in the trading process. To base all their trading only on this pattern is not necessary due to the rarity of the signals, but to have him in mind anyway would not hurt. For example, the folding could be one of the trading tools Your trading portfolio.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 552
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