USD/JPY Metronome Method - MT4/MT5 Resources
This is the system I use to trade USD/JPY, but it can actually be used for any currency pair. Currently I am focusing on USD/JPY to refine this approach and compile data for the right signals.
Basically the system is compiled from:
1. The “real” MACD
2. Stock Stochastic Indicator
3. "Trend" indicator (EMA) blue = bullish trend, red = bearish trend
4. Ichimoku cloud
5.ForexFactory Calendar Indicator
It generates a fairly accurate long-term signal (1 hour seems to be optimal).
Rule #1. Go with the flow.
I link this indicator to an email notification so I know immediately when the trend changes so I can intervene early. This is especially important if the trend does not last longer than a few periods. Worst case scenario: breakeven or loss < 10 pips; but only if you get in early. I would not recommend using this system for counter trend trading unless you are looking at other timeframes other than 1 hour+...you will get burned.
Typically I will enter after the first "trend change" period is over to allow the new trend to be confirmed. Once a trend is confirmed, the long-term trend (1 hour+) has "officially" changed and so far seems to last at least a full trading day in most cases.
Rule #2. Wait for MACD + Stochastics to converge.
If you look at the example chart, you will see that 95% of the time, MACD crossovers occur simultaneously with trend changes. We can predict this change by looking for random confirmations. The Stochastic is hovering around 80 and looks close to a crossover as the MACD is about to cross downwards, indicating a possible trend change. If the stochastics don't match, the move may be very slight and end up with a mild correction in the same trend rather than a change of direction.
The MACD included in this system is not the stock MACD indicator included in MT4. Use this indicator instead of the inventory indicator.
Rule #3. Look at PA's location relative to Ichimoku.
I use this indicator more as an indicator of where things are going after a trend change. A trending PA entering the Ichimoku cloud may encounter resistance, be very careful when the PA starts to hit the top or bottom of the cloud as this is usually a clear sign of support or resistance (a good time to take profits and, if it persists, get back into the trend). I won't go into detail about this indicator as it is not a primary factor in identifying trend changes; there are many excellent articles explaining how to use this indicator.
Rule #4. Stay up to date with the latest news releases.
You'd be surprised how news can trigger an already "ripe" setup. The MACD and Stochastics will be very close to crossing over, and then the economic release will be the turning point, sending PA surging in the direction of the other indicators. Don’t be discouraged by thinking that technology alone can save the world. A major news release can deal a heavy blow to an otherwise lucrative deal.
Some of you may be familiar with this indicator. It displays relevant upcoming news for currency pairs and links to the main ForexFactory calendar via RSS.
In addition to these indicators, I also include candlestick patterns and support and resistance lines. I will include some of this in future Trade posts.
Basically the system is compiled from:
1. The “real” MACD
2. Stock Stochastic Indicator
3. "Trend" indicator (EMA) blue = bullish trend, red = bearish trend
4. Ichimoku cloud
5.ForexFactory Calendar Indicator
It generates a fairly accurate long-term signal (1 hour seems to be optimal).
Rule #1. Go with the flow.
I link this indicator to an email notification so I know immediately when the trend changes so I can intervene early. This is especially important if the trend does not last longer than a few periods. Worst case scenario: breakeven or loss < 10 pips; but only if you get in early. I would not recommend using this system for counter trend trading unless you are looking at other timeframes other than 1 hour+...you will get burned.
Typically I will enter after the first "trend change" period is over to allow the new trend to be confirmed. Once a trend is confirmed, the long-term trend (1 hour+) has "officially" changed and so far seems to last at least a full trading day in most cases.
Rule #2. Wait for MACD + Stochastics to converge.
If you look at the example chart, you will see that 95% of the time, MACD crossovers occur simultaneously with trend changes. We can predict this change by looking for random confirmations. The Stochastic is hovering around 80 and looks close to a crossover as the MACD is about to cross downwards, indicating a possible trend change. If the stochastics don't match, the move may be very slight and end up with a mild correction in the same trend rather than a change of direction.
The MACD included in this system is not the stock MACD indicator included in MT4. Use this indicator instead of the inventory indicator.
Rule #3. Look at PA's location relative to Ichimoku.
I use this indicator more as an indicator of where things are going after a trend change. A trending PA entering the Ichimoku cloud may encounter resistance, be very careful when the PA starts to hit the top or bottom of the cloud as this is usually a clear sign of support or resistance (a good time to take profits and, if it persists, get back into the trend). I won't go into detail about this indicator as it is not a primary factor in identifying trend changes; there are many excellent articles explaining how to use this indicator.
Rule #4. Stay up to date with the latest news releases.
You'd be surprised how news can trigger an already "ripe" setup. The MACD and Stochastics will be very close to crossing over, and then the economic release will be the turning point, sending PA surging in the direction of the other indicators. Don’t be discouraged by thinking that technology alone can save the world. A major news release can deal a heavy blow to an otherwise lucrative deal.
Some of you may be familiar with this indicator. It displays relevant upcoming news for currency pairs and links to the main ForexFactory calendar via RSS.
In addition to these indicators, I also include candlestick patterns and support and resistance lines. I will include some of this in future Trade posts.
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