These trading signals are compatible with short time frames such as the 3 or 5-minute charts
This article is aimed at scalpers looking for powerful technical indicators that give accurate forex trading signals. The following is a combination of indicators that can be used to custom-find short-term trade opportunities.
Keep in mind that these trading signals are compatible with short time frames such as the 3 or 5-minute charts. These signals are more accurate during a strongly trending market or strong ranging market.
SMA Ribbon Signal Strategy
First you want to place a 5-8-13 SMA on a 2-minute chart to identify if a currency pair is trending. We’re looking to a place buy or sell orders before a counterswing in price. The 5-8-13 SMA will act as a ribbon pointing higher or lower. During strong trends, the SMA’s 5 or 8 line will be stuck to price bars. If price begins to touch and violate the SMA’s 13 line, then momentum is beginning to fade and a reversal will soon occur.
During a choppy range-bound market, the SMA ribbon will most likely flatten out and price will violate all three lines. When this occurs, wait for the ribbon to realign with the asset’s price by showing more space between the SMA lines. When this begins to happen, price is set to trend off into a certain direction. This is the signal we use to place buy or sell orders.
RSI Exit Signal Strategy
This signal strategy won’t tell you when to enter the market, but when to take profit and close your trade. To find this signal we use a 5-3-3 Stochastic and Bollinger Bands with a 13-bar and 3-standard deviation setting. You also want to have your SMA ribbon on the 2-minute chart. This strategy, when used with the SMA ribbon above, is most accurate when the stochastic moves higher over the oversold and lower against the overbought level while the SMA ribbon begins to widen. Use these indicators to exit a trade and take profit when the stochastic moves against your trade direction after a sizeable boost in price occurs.
Your exit timing can improve if you closely watch the Bollinger Bands’ interaction with price, and exit when price begins to violate the lower or higher band, depending if you place a buy or sell order. As a scalper, you don’t have time to wait for retracements to play out. Another good exit strategy comes up when a price boost fails to reach one of the bands but the Stochastic begins to turn. This is a sign to get out.