Power Dynamite Areas Strategy For MT4

Power Dynamite Areas Strategy For MT4

The Power Dynamite Areas Strategy For MT4 is a support and resistance based reversal forex trading strategy that is highly dependent on the Power Dynamite Areas indicator. The Power Dynamite Areas indicator detects and draws the next three resistance and support areas on the applied chart. The indicator is used to spot and catch the potential price reversal signals generated from the bounce coming along these support and resistance areas, also called Power Dynamite Areas.

The strategy supports and works on all time frames. It also suits all types of trading styles, such as scalping, intraday trading, swing trading, and positional trading. However, the strategy is designed specifically for the intraday traders and works best on the M15, M30, and H1 timeframe. We can also trade this strategy on all forex trading pairs, but it’s recommended to be traded on only major forex trading pairs.


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The Power Dynamite Areas Strategy For MT4 – Overview




The Power Dynamite Areas Strategy For MT4 also uses the MBFX Timing indicator along with the Power Dynamite Areas indicator. The MBFX Timing indicator is used as a filter indicator. It filters the price reversal signals generated by the Power Dynamite Areas to provide optimal reversal trading signals. Thus, the strategy consists of the following two trading indicators to provide valid and efficient support and resistance reversal trading signals.

Power Dynamite Areas Indicator: The Power Dynamite Areas indicator automatically detects and draws the next three essential support and resistance areas. These three support and resistance areas are plotted on the chart in the form of blue and red color horizontal lines. Both the three support and resistance areas are labelled as L1, L2, and L3, respectively.

The L1 support and resistance level is the most immediate support and resistance level. The L2 support and resistance level is the next support and resistance level coming after L1. The L3 support and resistance level is the most extreme support and resistance level.

These three support and resistance levels are strong key reversal points from which the chances of price reversing are very high. Thus a reversal signal is generated when the price bounces off from these support or resistance levels.

However, according to the strategy, we will consider the price bounce and reversal signal only if it’s generated through L2 and L3 support and resistance levels.

MBFX Timing Indicator: The MBFX Timing indicator is an overbought and oversold type of indicator that signals a change in price momentum and price direction. The MBFX Timing indicator’s signal line moving above the 70-level indicates an overbought price and the signal line moving below the 30-level indicates an oversold price.

The MBFX Timing indicator’s signal line with red color represents price moving downwards with bearish momentum, and the signal line with blue color represents price moving upwards with bullish momentum. The signal line with orange color represents a possible change is coming in price direction and momentum.

A buy signal is generated by the MBFX Timing indicator when the signal line goes below the 30-oversold level and turns back upwards, with the signal line changing its color to blue.

Similarly, a buy signal is also generated when the signal line falls below the 50-level and fails to fall below the 30-oversold level, and turns back upwards, with the signal line changing its color to blue.

A sell signal is generated by the MBFX Timing indicator when the signal line goes above the 80-oversold level and turns back downwards, with the signal line changing its color to red.

Similarly, a sell signal is also generated when the signal line rises above the 50-level and fails to rise above the 70-overbought level and turns back downwards, with the signal line changing its color to red.




The Power Dynamite Areas Strategy For MT4 – Buy Setup




FOR BUY/LONG SETUP:


We will wait for the price to fall and test the L3 support level and bounce upwards after testing or touching it such that the price manages to close above the L2 support level.

The MBFX Timing indicator signal line turns upwards either from or below the 50-level or the 30-oversold level and changes its color to blue.

If both the above conditions agree, we will trigger a buy/long trade at the opening of the next candle.


FOR EXIT:


We will take an exit at the predefined 1:2 risk:reward ratio or at the L2 resistance level, whichever comes first.


FOR STOP LOSS:


We will place the initial stop loss a few pips below the L2 or L3 support level through which the price bounced.

In the above chart, we can see the price was ranging and consolidating near the L2 and L3 support level, and finally, the price bounced off sharply from the L3 support level after testing or touching it. And at the same time, it also managed to close above the L2 support level and hence, fulfilling the first buying condition.

The price closing above the L2 support level forced the MBFX Timing indicator to turn upwards from or below the 50-level and change its color to blue. Thus, fulfilling the second buying condition.

Since now both the buying conditions are fulfilled, we will execute a buy trade at the next candle’s opening by placing a stop loss a few pips below the L3 support level and will target the price to hit the L2 resistance level or 1:2 risk:reward ratio.




The Power Dynamite Areas Strategy For MT4 – Sell Setup




FOR SELL/SHORT SETUP:


We will wait for the price to rise and test the L3 resistance level and bounce downwards after testing or touching it such that the price manages to close below the L2 resistance level.

The MBFX Timing indicator signal line turns downwards either from or below the 50-level or the 70-overbought level and changes its color to red.

If both the above conditions agree, we will trigger a sell/short trade at the opening of the next candle.


FOR EXIT:


We will take an exit at the predefined 1:2 risk:reward ratio or at the L2 support level, whichever comes first.


FOR STOP LOSS:


We will place the initial stop loss a few pips above the L3 resistance level.

In the above chart, we can see the price rose up to the L3 resistance level, and finally, the price bounced off sharply to the downside after testing or touching the L3 resistance level. At the same time, it also managed to close below the L2 resistance level and hence, fulfilling the first selling condition.

The price closing below the L2 support level forced the MBFX Timing indicator to turn downwards from and above the 70-overbought level and change its color to red. Thus, fulfilling the second selling condition.

Since now both the selling conditions are fulfilled, we will execute a sell trade at the next candle’s opening by placing a stop loss a few pips above the L3 resistance level and will target the price to hit the L2 support level or 1:2 risk:reward ratio, whichever comes first.

Download the complete system description and the files here:

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