Daily and H4 engulfing price action

You may have seen something like this before, and I apologize if it covers some aspects of the methods already described on this forum - I don't mean to disparage what others have already explained. I just want to describe my recent "lightbulb" experience in the hope that it will be useful to all of us.

This method uses price action and momentum to identify potential trades and place pending orders at appropriate levels. I also use the Daily and H4 timeframes because it suits the amount of time I spend in front of my computer screen.

method

1. Identify engulfing bars on the daily time frame. For the purposes of this method, an engulfing bar is a bar where the open and close prices engulf the open and close of the previous bar. Obviously, you wait until the bar closes and the next bar starts before establishing.
2. Once you have identified the engulfing bar, highlight its opening and closing status. I do this by drawing a rectangle from the opening price to the closing price, as shown in the attached figure Daily TF (gray rectangle).
3. Draw a horizontal line at the highest or lowest point of the bar, depending on whether it engulfs an ascending or descending bar. The chart shows an engulfing descending line and lower horizontal line (orange line).
4. After completing steps 1 to 3, enter the H4 time range (attached picture H4 TF).
5. On the H4 time frame, wait for a bar to close below the horizontal line drawn in step 3 and place a pending sell stop at that time. (As opposed to engulfing the bar).
6. Set your stop loss approximately 5 pips above the previous swing high (or below the swing low if it is an engulfing upline).
7. Ideally, set your take profit to 2 times the SL value in pips (or at least 1:1). Display example SL=48 points, therefore TP=96 points.
8. If you are confident set a second pending order with the same stop loss and go to break even when the other order reaches the target price and let it run! (Attached picture H4 to let it run)

Of course, sometimes this approach doesn't work due to various market reasons, but backtesting major currency pairs seems to have a good execution rate and some good points. enjoy.

Andy G