Here’s a simple scalping forex strategy based on a Piercing line pattern and 100 EMA and it is called the piercing line reversal pattern scalping strategy.
I’ll explain to you how this scalping strategy works. I will also give you some options on how to close your trades for profits, but first let me start by explaining what piercing candlestick pattern is.
Let’s get started…
What is piercing line pattern and how it looks like?
Before getting into the trading rules, let’s first talk about the subject matter of this post – piercing candlestick pattern . If you’re a complete newbie, you might not even be aware of what it is or how this pattern looks like. So, let’s cover that first.
A piercing candlestick pattern is a 2 bottom reversal candlstick pattern. The first candlestick is a bearish, followed by the second bullish candlestick: the second candlestick must gap up and open lower than the previous bearish candlestick and close above the midpoint of the first candlestick. Below is an example of a piercing patternPiercing line pattern is similar to the dark cloud pattern, the only difference between these two patterns is that piercing pattern is form at the bottom of a downtrend and it only signal buy setups whilst dark cloud pattern is formed at the top of an uptrend and it only give sell signals.
Indicators: 100 Exponential Moving Average
The 100 period EMA ( Exponential Moving Average ) is used to measure the direction of the trend: If price is above the EMA traders can assume the trend is up and should be lookimg for buy opportunities. If the price is below the EMA traders can assume the trend is down and they should be looking for sell opportunities.
Preferred time frame: 5 min
Trading sessions: any
Preferred Currency pairs: majors
Initiate a buy order if the following indicator or chart pattern gets displayed:
1. Price above the 100 EMA (uptrend).
2. Look for piercing candlestick pattern, when is completely formed, immediately place a buy trade.
3. Place a stop-loss of 5-15 pips below your entry level
4. Exit or take profit if the following rules or conditions takes precedence:
Price Target: I suggest a risk-to-reward of at least 4, which means you are only risking one dollar for every 4 dollars of profit potential, or you can use the previous swing high as your take profit. Below is an example of how to trade piercing pattern.
Sell Trade: No sell trades from the Piercing Line pattern.
Also read: 5 reasons to join my private room
I personaly don’t recommend scalping for retail traders for obviously reasons I wrote about here in this article. However, if you still want to continue scalping then its better to use this Forex scalping strategy with major currency pairs because they have the lowest available spreads. In addition, this approach might be most effective during high volatility trading sessions, which are usually New York closing and London opening times.
If you are just getting started with scalping, open up a demo account and try your hand at making a few market predictions to see how well you do. Otherwise good luck!!