Proverbs 16:3 Trading Strategy

This day-trading strategy uses historical data to analyze price action based on relationships between the trend, designated sets of average price ranges and the overall 24-hour market structure across multiple time frames via "Dynamic Trailing Support and Resistance Envelopes" as pictured here:

http://www.trade2win.com/boards/atta...s16-3setup.png

I've looked around and it seems to me that the use of multiple envelopes, or "envelopes within envelopes" is somewhat of a hallmark for this approach in that I've yet to find evidence of it being used by anyone else who's been active online.

Since the idea behind this approach is to enter positions based on the relationship between the trend, designated sets of average price ranges and the overall daily structure of the market, my hope is that it will give me a reasonable idea of where it would make sense to enter the market. Consequently, I pick my spots in advance and wait for the trades to come to me, so here are my initial plans for the start of next week.

Enter a long position if AUDUSD pulls back to support on the lower timeframe charts.

Enter a long position if and when EURGBP pulls back to support on the 1-hour chart.

Buy EURJPY when the trend turns north on the 1-hour chart (assuming it remains bound to the same range it has been stuck in for the last seven to ten days).

EURUSD is probably not worth the risk. It looks as if it is initiating a downtrend, in which case, it would make sense to sell the pair when it pulls back to resistance on the 1-hour chart. (But it might be wise to use a tight stop in case the asset is actually reversing north.)

Sell GBPJPY after it pulls back to resistance on the 1-hour chart.

Short GBPUSD if and when price pulls back to resistance on the 1-hour chart.

What exactly is your entry criteria?

My entry criteria are simple. As you might expect, the trade has to be in the same direction as the daily trend. For the sake of illustration, let?s say that day-to-day price movement is experiencing upward momentum.

I simply wait for price to pull back below the floor of the intermediate (grayish) envelope, and then enter a long position upon the formation of the first green candlestick, or the first candlestick that finds its way back inside the ?fast? (white) envelope. (See the image below.)

My stop loss is set slightly below the lowest candlestick shadow in the area, and I exit the trade when price hits the top of the fast envelope (if I?m being conservative). If I?m willing to be patient and risk a loss in order to reap a much more substantial gain, I place my take profit target so it corresponds with the ceiling of the intermediate envelope. (Of course, my reward-to-risk ratio has to me a minimum of 1:1.)