Fx Impulse Pullback Strategy

Lesson 5 Impulse Pullback Strategy FX M15 By Adam Khoo [email protected] Copyright © Adam Khoo Learning Technologies Group Pte Ltd 2017

Impulse Pullback The Impulse Pullback (IP) is a strategy that seeks to long FX pairs that have pulled back after just starting a new uptrend and shorting FX pairs that have just pulled back after starting a new downtrend. Time frames: M15 optimal, Trade Duration = < 6 Hours Frequency: 15-40 trades a month All FX Pairs : GBPUSD, EURUSD, USDJPY, USDCHF, USDCAD, AUDUSD Must use brokers with tight spreads of 1 to 2 pips maximum The idea is to identify the beginning of a new short term impulsive trend, wait for a pullback and place a buy (sell) order to catch the continuation of the trend.

SELL

BUY

Candle Price Action Definitions Uptrend (Long Setups) Pullback Candle

• Candle that makes lower high and lower low versus previous candle

Inside Bar

• Candle that makes a lower high and higher low versus previous candle

Pullback candle

Inside Bar

Downtrend (Short Setups) Pullback Candle

• Candle that makes higher high and higher low versus previous candle

Inside Bar

• Candle that makes a lower high and higher low versus previous candle

Pullback candle

Inside Bar

Long Setup The new trend is signalled by a 6/18EMA crossover For long entries • A new uptrend is signalled by the 6EMA crossing above the 18EMA • We want to see an immediate corrective pullback after the uptrend • The candle immediately at or after the crossover signal is known as the Swing High (SH) candle • The next candle after the SH candle must make a lower high for it to be a valid setup. It could either be a pullback or inside bar

Long Entry with 1 Pullbacks

Swing high Buy entry Pull back Uptrend signal 6 cross 18ema

Long Setup

Long Entry with 2 Pullbacks

Pull back Pull back

Swing high

Buy entry

Uptrend signal 6 cross 18ema

Long Setup Long Entry with Inside bar, pullback, inside bar

Inside bar Pull back Inside bar

Swing high Buy entry

Uptrend signal 6 cross 18ema

Rule for Pullbacks (Long Setup) No more than 3 Pullbacks for a long position No limit for number of inside bars Price should not pullback below the 50MA Swing High

PB PB PB maximum 3 pullbacks

50MA

Short Setup For Short entries • A new downtrend is signalled by the 6EMA crossing below the 18EMA • We want to see an immediate corrective pullback after the downtrend • The candle immediately at or after the crossover signal is known as the Swing Low (SL) candle • The next candle after the SL candle must make a Higher Low for it to be a valid setup. It could either be a pullback or inside bar Pull back Pull back Downtrend signal 6cross18ema Sell entry

Swing Low

Short Setup Short Entry with 3 Pullbacks

Pull back Pull back Pull back Sell entry

Downtrend signal Swing Low 6cross18ema

Short Setup Short Entry with Inside bar, Pullback

Pull back Inside bar

Sell entry

Downtrend signal 6cross18ema

Swing Low

Rule for Pullbacks (Short Setup) No more than 3 Pullbacks for a Short position No limit for number of inside bars Price should not pullback above the 50MA

PB

SL

PB PB

50MA

Chart Setup 6EMA,18EMA, 50 EMA 200MA

Long Setup Entry Rules 1) Bullish signal from 6EMA crossing above 18EMA 2) 6EMA and 18EMA above 50EMA. 50EMA above 200MA 3) Swing High (SH) after bullish signal is followed by pullback (PB) or an inside bar (IB) + a pullback (PB)- maximum 3 pullbacks. 4) Higher time frame H1candles on Uptrend (6EMA>18EMA>50MEA>200MA) 5) Entry: Place Buy Stop Order just above last valid IB or PB (Trigger Bar). 6) Stop Loss: Place a Sell Stop Order just below the lowest pullback candle 7) The stop loss distance (Entry to Stop Loss) will be the 1R distance. This should be at least 8 pips 8) Target Price: Place a Sell Limit Order 1.5R above the entry price Low Risk Filters • No major news release within the next 10 candles (i..e 150 mins for M15) • No significant resistance levels within 1.5R of the entry price • Ideally, the pullback candles find ‘support’ at the moving averages

Long GBP USD 28 August

1 Pullback

SH Sell Limit 1.2912

6cross18ema

20 pips

Buy Stop 1.2892

PB Price above 50EMA Pullback candle finds support at MAs

13 pips Sell Stop 1.2879

Long USDJPY 30 August Price above 50ema Pullback candle finds support at MAs Inside Bar, Pullback SH 6cross18ema

Sell Limit 109.92 12 pips Buy Stop 109.80 Sell Stop109.72

8 pips

Long EUR USD 5 May Price above 50EMA Pullback candle finds support at MAs SH IB, PB, IB, PB

Sell Limit 1.0989 12 pips Buy Stop 1.0977 8 pips Sell Stop 1.0969

6cross18ema

Long EUR USD 16 Feb SH Price above 50EMA Pullback candle finds support at MAs

Sell Limit 1.0989 14 pips Buy Stop 1.0977

IB, IB

9 pips Sell Stop 1.0969

6cross18ema

When Doing a Long Trade on M15… H1 Chart Must Show Uptrend M15 Chart

H1 Chart

When Doing a Long Trade on M15… H1 Chart Must Show Uptrend M15 Chart

H1 Chart

Check Forexfactory for Upcoming RED News and Avoid trading 10 candles before news.

8.30pm CAD USD News

Check Forexfactory for Upcoming RED News and Avoid trading 10 candles before news.

8.30pm CAD USD News

Is This a Valid Setup?

Is This a Valid Setup?

Short Setup Entry Rules 1) Bearish signal from 6ema crossing below 18ema 2) 6EMA and 18EMA below 50EMA. 50EMA below 200MA 3) Swing low (SL) after bearish signal is followed by a Pullback (PB) or an inside bar (IB) and a pullback (PB)- maximum 3 pullbacks. 4) Higher time frame H1candles on Downtrend (6EMA<18EMA<50EMA<200MA) 5) Entry: Place Sell Stop Order just below last valid IB or PB (Trigger Bar). 6) Stop Loss: Place a Buy Stop Order just above the highest pullback candle 7) The stop loss distance (Entry to Stop Loss) will be the 1R distance. This should be at least 8 pips 8) Target Price: Place a Buy Limit Order (Profit target) 1.5R below the entry price Low Risk Filters • No Major News release within the next 10 candles (i.e. 150 minutes for M15) • No significant support levels within 1.5R of the entry price • Ideally, the pullback candles find ‘Resistance’ at the moving averages

Short USD JPY 28 July IB PB 1 Pullback

Buy Stop 111.17 13 pips

6cross18ema

Sell Stop 111.04 20 pips SL

Price below 50ema Pullback candle finds resistance at MAs

Buy Limit 110.84

Short AUD CAD 31 AUG 1 Pullback PB Buy Stop 0.9902 8 pips SL 6cross18ema

Price below 50ema Pullback candle finds resistance at MAs

Sell Stop 0.9894 12 pips Buy Limit 0.9882

Short GBP USD 21 Sept 1 Pullback PB

Buy Stop 1.3496

8 pips

Sell Stop 1.3488

6cross18ema

Price below 50ema Pullback candle finds resistance at MAs

SL

12 pips Buy Limit 1.3476

When Doing a Short Trade on M15… H1 Chart Must Show A Downtrend M15 Chart SL

H1 Chart

Entry

Swing low Target

Is This a Valid Setup?

Is This a Valid Setup?

Spreads on Pairs should be Less Than 2 pips

Risk & Trade Management 1. Set a Target profit (TP) of 1.5R 2. Wait for the price to either hit the target price (1.5R) or stop loss price of -1R

Lesson 5 Impulse Pullback Strategy FX M15 By Adam Khoo [email protected] Copyright © Adam Khoo Learning Technologies Group Pte Ltd 2017