The Reversal Strategy: Catching Major Market Turns
The "Reversal" Strategy is a high-reward trading system designed for the H4 timeframe. It aims to identify major turning points by combining the structure-defining ZigZag indicator with an 18-period Moving Average to confirm breakouts.
Strategy Profile
Timeframe
H4
Pairs
EURUSD, GBPUSD
Indicators
ZigZag (150) + 18 SMA
1. Indicator Setup
To implement this strategy, configure your chart as follows:
- ZigZag Indicator: Set Period to 150. This high value filters out noise.
- Moving Average: Simple Moving Average (SMA), Period 18.
2. Trade Entries
Long Entry (Buy)
Open a long position when:
- The ZigZag indicator fixes a Low (bottom of a swing).
- Price breaks and closes ABOVE the 18 SMA.
Short Entry (Sell)
Open a short position when:
- The ZigZag indicator fixes a High (top of a swing).
- Price breaks and closes BELOW the 18 SMA.
Risk Management
- Stop Loss: 50 points (pips).
- Take Profit: 150-200 points (pips).
- Risk/Reward: 1:3 or 1:4.
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