SURE FIRE TRADING CHALLENGE

System Overview

The system is designed to trade the EUR/USD currency pair on a 5-minute chart using a combination of technical indicators to identify buy and sell opportunities. The primary indicators used in this system are:

  • Relative Strength Index (RSI) with a period of 7
  • Commodity Channel Index (CCI) with a period of 7
  • Simple Moving Average (SMA) with a period of 1 (optional)

The system focuses on identifying bullish and bearish divergences between the price and the RSI/CCI indicators. Divergence signals potential reversals in price movement, providing opportunities to enter trades.

Buy/Long Trade Rules

  1. Chart and Indicators Setup: Use the EUR/USD 5-minute chart. Wait for the price to enter an area of interest, such as previous support/resistance levels or round numbers.
  2. Identify Bullish Divergence: Spot bullish divergence between the price and the RSI/CCI using a line chart or an SMA 1 on a candle chart. Bullish divergence occurs when the price makes a lower low, but the RSI or CCI makes a higher low.
  3. Trigger Candle: From the recent low showing divergence, wait for a bullish candle to close within the next two bars.
  4. Entry Point: Enter a long (buy) trade at the close of the bullish candle.
  5. Stop Loss: Set the stop loss below the swing low.
  6. Take Profit: Set the take profit at a 1:1 ratio based on the stop loss level.

Note: Avoid trading during news releases.

Sell/Short Trade Rules

  1. Chart and Indicators Setup: Use the EUR/USD 5-minute chart. Wait for the price to enter an area of interest, such as previous support/resistance levels or round numbers.
  2. Identify Bearish Divergence: Spot bearish divergence between the price and the RSI/CCI using a line chart or an SMA 1 on a candle chart. Bearish divergence occurs when the price makes a higher high, but the RSI or CCI make a lower high.
  3. Trigger Candle: From the recent high showing divergence, wait for a bearish candle to close within the next two bars.
  4. Entry Point: Enter a short (sell) trade at the close of the bearish candle.
  5. Stop Loss: Set the stop loss above the swing high.
  6. Take Profit: Set the take profit at a 1:1 ratio based on the stop loss level.

Note: Avoid trading during news releases.

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