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Forex: The Moving Average MACD Combo

                               

The MACD combo strategy involves using two sets of moving averages (MA) for the setup:

50 simple moving average (SMA) – the signal line that triggers the trades
100 SMA – gives a clear trend signal
The actual time period of the SMA depends on the chart that you use, but this strategy works best on hourly and daily charts. The main premise of the strategy is to buy or sell only when the price crosses the moving averages in the direction of the trend.

Rules for a Long Trade
Wait for the currency to trade above both the 50 SMA and 100 SMA.
Once the price has broken above the closest SMA by 10 pips or more, enter long if MACD has crossed to positive within the last five bars, otherwise wait for the next MACD signal.
Set the initial stop at a five-bar low from the entry.
Exit half of the position at two times risk; move the stop to breakeven.
Exit the second half when the price breaks below the 50 SMA by 10 pips.

Rules for a Short Trade
Wait for the currency to trade below both the 50 SMA and 100 SMA.
Once the price has broken below the closest SMA by 10 pips or more, enter short if MACD has crossed to negative within the last five bars; otherwise, wait for the next MACD signal.
Set the initial stop at a five-bar high from entry.
Exit half of the position at two times risk; move the stop to breakeven.
Exit the remaining position when the price breaks back above the 50 SMA by 10 pips. Do not take the trade if the price is simply trading between the 50 SMA and 100 SMA.