Today we're going to talk about how to trade on the weekly timeframe. Trading on the weekly chart makes it clear that this trading strategy is for those who are patient, do not rush anywhere, and are willing to wait for signals for weeks or even months.
The idea behind the trading system
So, it is designed for those who have no hurry, or vice versa, for those who have very little time, and they can check the charts for a minute on weekends at most. Trades on this strategy are made once a week. It is possible to enter at the opening of the market, but the best entry will be on Monday morning; at this time prices are more attractive, and the entry time does not make any sharp moves in the weekly timeframe.
The strategy is very simple, and it is possible to trade "anything that moves", because the system is based on a simple and plain idea. We wait until the weekly chart shows three candlesticks in a row in the same direction, either bullish or bearish, and then we enter in the same direction. That's it. That's how easy it is. The fact is that this pattern of three consecutive weekly candlesticks in one direction shows that there are a large number of big traders buying or selling.
Because it takes a lot of money to move the price three weeks in a row in one direction, when that happens, it means that someone really needs the price to move. And this impulse attracts other participants into the market. Not necessarily a very strong trend is formed. But one can count on the continuation of the movement equal to the found formation from the opening of the first candle to the closing of the third one, without tails. It is often possible to see stronger movements. Once again, the idea is very simple: if we see three weekly candlesticks in a row in one direction, it means that there is a lot of money in the market, which pushes the price in this direction.
Strategy Rules
The basic rules you've probably already figured out are: we wait for three one-way candlesticks in a row, and then we enter on Monday morning in the same direction. The candlesticks must be obvious and clean; their bodies should be visible to the naked eye without zooming in on the chart. The doji with practically no body is not considered.
Moreover, if the candle's body is not visible on the distant chart and interrupts our formation, then we start the counting of three candles in a row again. In other words, it should be obvious even to a child who has won this week with the bulls or the bears.
A stop-loss should be placed right after the formation. It will not trigger very often because the strategy is very reliable, but sometimes it still happens. Take profit is set at a distance equal to the formation. As a result, it turns out that the stop-loss and take-profit ratios in the strategy are approximately 1 to 1. You can, of course, experiment with your own variations, but this approach is the most effective in terms of winrate.
If, after the signal is worked out, we see three candles in a row in the same direction again, it may be too risky to re-enter. It is more reliable if there is at least one opposite candle between two unidirectional signals that the market still needs to correct.
If the price missed taking profit just a bit and started to correct, you'd better exit. The profit may be somewhat smaller, but it will still be there. This method protects not only from losing profits but also from triggered stop-losses. Those who use classic price action can also monitor strong levels, and if the price hits one of them, they can exit with a smaller profit.
In case the opposite entry signal for this strategy was formed before our trade closed at take profit or stop loss, it is better not to argue with the market. Close the current trade and enter immediately on the new signal.
Money Management Strategy
Money management is very important in this system. The strategy uses large take and stop positions, so the lots should be small. Fortunately, small capital allows for competent money management even with a $100 deposit. The trade volume should not exceed 1% of the capital. For an exact calculation, it is better to use the lot calculator.
Examples of trades
On the weekly timeframe of the GBP, three bearish candles were formed in a row. We wait for Monday morning to enter; the quotes open with a gap, but taking into account the target take level of 382 pips, the order accuracy does not play a big role in the trade. After selling GBPUSD, set a take profit equal to the distance from Friday's closing price to the opening price of the first of the three candles of the pattern. We put a stop just above the upper tail of the first candle.
Despite the long fall, the quotes have not reached take-profit. This is exactly the case when it is worth going out and not waiting. As described above in the strategy rules, if a candle visually misses the take-profit mark, we exit the trade. The trader who left the short would have to close the trade with a loss due to the opposite signal. Three rising candles are a signal to close any opposite positions and open a long position in GBPUSD.
As we can see from the chart, the pound did not go up, and the trade was closed with a stop loss. The rules of the trading system do not override the principles of technical analysis, which can be seen in another example of using this strategy when trading gold. Three candles in a row, the first of which passed the minimum "body visibility" requirements, gave a buy signal. After one week of fall, quite far from the set take profit, a reversal pinbar is formed. In favor of fixing the position at the support level. The trader would have received a stop if he had not exited the position.
On the same chart later, the quotes again give a signal to go short, but in this case, the bears manage to break the support. On the next wave, the traders break through the suppport with momentum, and the price eventually reaches our take profit. Above are specially cited examples of complex cases; as the setups can be seen with the naked eye, you can find more simple examples on your own.
Conclusion
The strategy works flawlessly on the major currency pairs. Even on such volatile days. The weekly strategy is also suitable for very aggressive instruments, such as gold. Stop-losses, of course, will be knocked out a bit more often than on more "calm" instruments, but the trading system remains effective. In addition, it perfectly protects against a flat, as three unidirectional candles clearly indicate the end of the consolidation and the formation of a trend.
The idea behind the trading system
So, it is designed for those who have no hurry, or vice versa, for those who have very little time, and they can check the charts for a minute on weekends at most. Trades on this strategy are made once a week. It is possible to enter at the opening of the market, but the best entry will be on Monday morning; at this time prices are more attractive, and the entry time does not make any sharp moves in the weekly timeframe.
The strategy is very simple, and it is possible to trade "anything that moves", because the system is based on a simple and plain idea. We wait until the weekly chart shows three candlesticks in a row in the same direction, either bullish or bearish, and then we enter in the same direction. That's it. That's how easy it is. The fact is that this pattern of three consecutive weekly candlesticks in one direction shows that there are a large number of big traders buying or selling.
Because it takes a lot of money to move the price three weeks in a row in one direction, when that happens, it means that someone really needs the price to move. And this impulse attracts other participants into the market. Not necessarily a very strong trend is formed. But one can count on the continuation of the movement equal to the found formation from the opening of the first candle to the closing of the third one, without tails. It is often possible to see stronger movements. Once again, the idea is very simple: if we see three weekly candlesticks in a row in one direction, it means that there is a lot of money in the market, which pushes the price in this direction.
Strategy Rules
The basic rules you've probably already figured out are: we wait for three one-way candlesticks in a row, and then we enter on Monday morning in the same direction. The candlesticks must be obvious and clean; their bodies should be visible to the naked eye without zooming in on the chart. The doji with practically no body is not considered.
Moreover, if the candle's body is not visible on the distant chart and interrupts our formation, then we start the counting of three candles in a row again. In other words, it should be obvious even to a child who has won this week with the bulls or the bears.
A stop-loss should be placed right after the formation. It will not trigger very often because the strategy is very reliable, but sometimes it still happens. Take profit is set at a distance equal to the formation. As a result, it turns out that the stop-loss and take-profit ratios in the strategy are approximately 1 to 1. You can, of course, experiment with your own variations, but this approach is the most effective in terms of winrate.
If, after the signal is worked out, we see three candles in a row in the same direction again, it may be too risky to re-enter. It is more reliable if there is at least one opposite candle between two unidirectional signals that the market still needs to correct.
If the price missed taking profit just a bit and started to correct, you'd better exit. The profit may be somewhat smaller, but it will still be there. This method protects not only from losing profits but also from triggered stop-losses. Those who use classic price action can also monitor strong levels, and if the price hits one of them, they can exit with a smaller profit.
In case the opposite entry signal for this strategy was formed before our trade closed at take profit or stop loss, it is better not to argue with the market. Close the current trade and enter immediately on the new signal.
Money Management Strategy
Money management is very important in this system. The strategy uses large take and stop positions, so the lots should be small. Fortunately, small capital allows for competent money management even with a $100 deposit. The trade volume should not exceed 1% of the capital. For an exact calculation, it is better to use the lot calculator.
Examples of trades
On the weekly timeframe of the GBP, three bearish candles were formed in a row. We wait for Monday morning to enter; the quotes open with a gap, but taking into account the target take level of 382 pips, the order accuracy does not play a big role in the trade. After selling GBPUSD, set a take profit equal to the distance from Friday's closing price to the opening price of the first of the three candles of the pattern. We put a stop just above the upper tail of the first candle.
Despite the long fall, the quotes have not reached take-profit. This is exactly the case when it is worth going out and not waiting. As described above in the strategy rules, if a candle visually misses the take-profit mark, we exit the trade. The trader who left the short would have to close the trade with a loss due to the opposite signal. Three rising candles are a signal to close any opposite positions and open a long position in GBPUSD.
As we can see from the chart, the pound did not go up, and the trade was closed with a stop loss. The rules of the trading system do not override the principles of technical analysis, which can be seen in another example of using this strategy when trading gold. Three candles in a row, the first of which passed the minimum "body visibility" requirements, gave a buy signal. After one week of fall, quite far from the set take profit, a reversal pinbar is formed. In favor of fixing the position at the support level. The trader would have received a stop if he had not exited the position.
On the same chart later, the quotes again give a signal to go short, but in this case, the bears manage to break the support. On the next wave, the traders break through the suppport with momentum, and the price eventually reaches our take profit. Above are specially cited examples of complex cases; as the setups can be seen with the naked eye, you can find more simple examples on your own.
Conclusion
The strategy works flawlessly on the major currency pairs. Even on such volatile days. The weekly strategy is also suitable for very aggressive instruments, such as gold. Stop-losses, of course, will be knocked out a bit more often than on more "calm" instruments, but the trading system remains effective. In addition, it perfectly protects against a flat, as three unidirectional candles clearly indicate the end of the consolidation and the formation of a trend.
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bit.ly/3spSQqC
🔻FREE Telegram channel🔻
t.me/DeGRAMChannel
🔻Contact for Paid SIGNALS🔻
t.me/DeGRAMForex