This looks like an interesting system - basically a variation on a moving average crossover system, using two sets of two moving averages and also two different types of moving average -
The basic rules of the system are as follows:
- Use 1 hour (or 30 minute chart, but you will get more shakeouts)
- Use 18 period and 28 period EMA's - make these both in red
- Use 5 period WMA (blue) and 8 period WMA (yellow)
The longer term averages (18 and 28 period EMA's) will help determine the start and finish of the longer term trend.
The 5 and 8 period WMA's will determine your trade entry, and reflect the short term trend.
Entry Signals
Long Entry: Buy when the 5 and 8 period WMA's cross the red 18 and 28 period EMA's upwards. Signal is extra strong and provides confirmation if the 5 period WMA also crosses the 8 period WMA upwards.
Short Entry: Sell when the he 5 and 8 period WMA's cross the red 18 and 28 period EMA's downwards. Signal is extra strong and provides confirmation if the 5 period WMA also crosses the 8 period WMA downwards.
Exit Signals
Exit long position when 5 period WMA crosses below 8 period WMA
Exit short position when 5 period WMA crosses above 8 period WMA
Close long or short positions when longer term red EMA's cross or become so narrow that they become one. This is a reversal signal telling you to flip your position from long to short or vice versa.
Recommended Stop Loss: 10-15 pips
Recommended Pairs: EUR/USD, EUR/GBP