Support and Resistance Barry with Trend line Strategy For MT4

Support and Resistance Barry with Trend line Strategy For MT4

 

Table Of Contents:

  1. Support and Resistance Barry with Trend line Strategy For MT4
  2. Indicator Used and Time Frames
  3. Support and Resistance Barry with Trend line Strategy For MT4 - Trading
  4. Long entry
    1. Stop Loss and Take Profit
  5. Short entry
    1. Stop Loss and Take Profit Settings
  6. Conclusion

 

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The Support and Resistance Barry with Trend line Strategy For MT4 is a price action strategy that draws its functionality from the support and resistance Barry indicator. This strategy can be used to trade with the trend. But more importantly, this strategy has also been perfected to enable the trader to trade range-bound market situations. In other words, the trader can trade a market or an asset that is trending sideways with this strategy.

So what are the critical elements that constitute the Support and Resistance Barry with Trend line Strategy For MT4?


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Indicator Used and Time Frames

 

The strategy can be used on any currency pair or asset, and has to be deployed on the H4 time frame. There are three indicators that make up the tools used for the strategy. These indicators are:

 

    • 4H Trader

 

    • 3dfx indicator

 

    • Support and Resistance Barry


    • Signal bars 7 Indicator


The 4H Trader is an arrow indicator which puts out a green arrow that points upwards when there is a buy situation, and a red signal arrow that points downwards when there is a short selling opportunity.

The 3dfx indicator is a momentum indicator which displays two lines: a blue line and a purple coloured line. The two lines of the 3dfx indicator operate like a fast and slow moving average, and the crossover of the two lines produces signals which are identified using a red dot for a sell signal, and a yellow dot for a buy signal. The dot signals are best applied in the market extreme areas. Therefore, the yellow dot signal below the crossover of the lines in an oversold area is the best buy signal, while the red dot appearing above a crossover in the overbought zone is the best selling signal. Dots and crossover signals appearing in the middle of the indicator window should not be traded.

The Support-Resistance Barry (SRBarry) indicator is meant to detect areas where the price candles find support or resistance. These areas are marked by starred or dotted lines which are also colour-coded. A sky blue line appearing below the candles is a support line, while the tomato red line appearing above the candles is a resistance line. The trader is meant to buy at support or sell at resistance, using confirmation from the other indicators mentioned here.

While not essential to the trading strategy per se, the Signal bars 7 Indicator provides indication as to the daily trading range of the asset being traded.



Support and Resistance Barry with Trend line Strategy For MT4 - Trading

 

The trading strategy relies on the combination of the buy and sell signal parameters for all indicators used here to align themselves. The principle is to buy off support when the market is oversold, and to sell at resistance when the market is overbought.

So how can you go about this? First, we will examine how to buy at support when the market is oversold.

 

  1. Long entry

 

These are the parameters to look out for when trying to buy at support when the asset is oversold.

 

    • The SRBarry indicator must show a sky blue line under the price candles, indicating that the asset is now at support.

 

    • The 3dfx indicator should show a cross of the blue line above the purple line, along with a yellow dot in the oversold indicator window area.


    • Wait for the green arrow of the 4H Trader indicator to appear below the candles, which indicates that it is time to initiate the long entry. Go long at the open of the next candle to ensure that the 4H Trader indicator arrow does not repaint.

 

The chart below shows what the buy trade setup looks like. You can see that there were 3 areas where the buy setups were valid. Please note that the 4H trader arrow is not the most critical component of the strategy. Sometimes, it may be possible to buy the asset even when there is just the candle bouncing off the SRBarry indicator’s support line, at the same time that the 3dfx indicator shows the crossover signal with the yellow dot in the oversold price area.


Stop Loss and Take Profit

The setup for this strategy will allow for the placement of the stop loss and take profit price levels in such a way as to provide for a risk-reward ratio of at least 1:3. This means you must aim to make 3 pips for every 1 pip you set as your stop loss. For the long trade, set the stop loss below the sky blue support line of the SRBarry indicator.

Choose a previous resistance on the chart and use it as the benchmark for setting the Take Profit price level. This is demonstrated here. Another way to conserve profits is to close half the position when in profit by a certain predetermined number of pips, then adjust the SL to the entry price and allow the trade to run, using a trailing stop protection.

 

  1. Short entry

 

What do you look for when trying to detect an opportunity for a short trade? Check for the following parameters on the chart:

 

    • The SRBarry indicator shows a tomato red line above the price candles, which indicates that the asset has met resistance.

 

    • The 3dfx indicator should show a cross of the blue line below the purple line, along with a red dot in the overbought indicator zone.


    • Wait for the appearance of the red arrow of the 4H Trader indicator above the candles, then go short at the open of the next candle to ensure that the arrow does not repaint.




The snapshot above shows the typical situation in the short trade setup. There were three valid setups, which all showed how profitable the trades could be when all parameters align perfectly. 

 

Stop Loss and Take Profit Settings

The stop loss is set above the SRBarry’s tomato red support line, with the Take Profit set using a previous support as the benchmark. The RRR setting of at least 1:3 is compulsory to ensure adequate cushion against losing positions.

 

Conclusion

This is one of the strategies that can be used to trade range-bound market situations effectively. The use of a suitable momentum indicator signal as the filter improves the profitability of the strategy. Practice this well on demo before applying it to a real money account.

Download the complete system description and the files here:

FREE Support and Resistance Barry with Trend line Strategy

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