Lesson 1: Knowing The Signals (Trend Continuation & Counter-Trend Patterns)

Now that you have already set up your chart, let's move on to how to spot and trade signals for 4 hour MACd trading strategy. Basically, there are two types of trade for this strategy. The counter trend trades and trend continuation trades. At the later stage, you might discover more ways to trade with the 4 Hour MACd trading strategy, but lets leave them alone until you have master trend continuation and counter-trend trades.

Trend Continuation Patterns

Signal A & B are the trend continuation patterns when the market is trending up. As you can see, if you trade signal A & B, you would have a profit of 428 pips in that month.

Conversely, Signal C is a TC pattern during a down trend. This picture was taken during the beginning of August 2008 when USD was strengthening against the EUR. You could have made 564 pips easily if you took this trade.

Adding on to the list, there are 2 more types of Trend Continuation Patterns you should take note of. Bounce Off Zero (BOZ) & Through Zero Pulled Back look slightly different form the standard Trend Continuation pattern mentioned above, but they are basically the same and should be treated as TC patterns.

Counter-Trend Patterns

CTs should be traded with caution, as they are relatively considered higher risk signals compared to the trend continuation patterns. As the name has already suggests, CTs are trades that are placed against the trend. CTs are normally traded with strong confirmations from other instruments/indicators such as the trend line, support/resistance line and Fibonacci retracement.

After mastering all the signals, you should be able to trade these patterns at least 5 times per month. To let you have a feel of how these signals are traded, take a look at the chart attached below.