Karan Flag Pattern Forex Trading Strategy uses high probability patterns, many traders find it difficult to trade. This is because identifying it is quite difficult to an untrained eye.
The idea behind this strategy is to use moving averages to identify the area which could expect flags and pennants to form after a sudden thrust. To do this, we will be using the 14-period and 50-period Exponential Moving Average (EMA). After a sudden thrust, we will be waiting for the price to retrace to the area between these two moving averages. Then, we will try to identify flag or pennant patterns on it. If we could identify one, then we wait for the breakout and trade accordingly.
We will also be using the 200 EMA to help us identify a trend. This means that price and the other two EMAs should be on the correct side of the 200 EMA. This also means that all three EMAs should be stacked depending on the direction of the trend.
Indicators
- 14-period EMA (Gold)
- 50-period EMA (Green)
- 200-period EMA (Brown)
Timeframe: any
Currency Pair: any
Trading Session: any
How to trade with Karan Flag Pattern Forex Trading Strategy?
Buy (Long) Trade Setup Rules
Entry
- A bullish price thrust should occur
- Price should be above the EMAs
- The EMAs should be stacked in the following order:
- 14 EMA: top
- 50 EMA: middle
- 200 EMA: bottom
- Wait for price to retrace between the 14 & 50 EMA
- A flag or pennant pattern should be identifiable
- Wait for the close of the candle which breaks out of the resistance line
- Enter a buy market order at the close of the breakout candle
Stop Loss
- Set the stop loss at the fractal below the entry candle
Take Profit
- Set the take profit at 2x the risk
Sell (Short) Trade Setup Rules
Entry
- A bearish price thrust should occur
- Price should be below the EMAs
- The EMAs should be stacked in the following order:
- 200 EMA: top
- 50 EMA: middle
- 14 EMA: bottom
- Wait for price to retrace between the 14 & 50 EMA
- A flag or pennant pattern should be identifiable
- Wait for the close of the candle which breaks below the support line
- Enter a buy market order at the close of the breakdown candle
Stop Loss
- Set the stop loss at the fractal above the entry candle
Take Profit
- Set the take profit at 2x the risk
How to download and install an indicator?
In order to install the indicator on your MT4 platform, you need to follow these steps:
- Click on “Download Indicator” button located at the bottom of the post.
- Save the file to your computer.
- Extract and move the files into MT4>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select “Karan Flag Pattern Forex Trading Strategy” template to apply it on the chart.
Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.
