In this article we are going to see what the "ADX Power" trading strategy consists of to operate in the Forex currency market:
Chart : 4 hours is a good time frame, but you are free to use it at lower time frames.
Currency pairs : any
Indicators : EMA9 and EMA26 and DMI (Directional Movement Indicator with ADX)
DMI adjustments : draw a horizontal line at 25 to see the crosses of DI + or DI-
ADX adjustments : ignore signals where ADX is less to 20
- EMA9 has crossed above EMA26
- DI +> = 25
- ADX> = 20
Exit the length when:
- EMA9 has crossed EMA26 and
- DI + is less than DI-
What to ignore
- While long: DI + and DI- crosses while EMA9 is still above EMA26
- While short: DI + and DI- crosses while EMA26 is still above EMA9
- While looking for opportunities to trade: EMAS has crossed but DI + or DI- (depending on whether you are looking for Short or Long positions) is still below 25. Also, wait until the ADX has reached 20 before entering trade.
- A price that breaks the lower EMA line (EMA26, in case of Long positions), while EMA9 is still above EMA26.