Trading the Guppy Crossover

In order to keep the guppy trading as simple as possible, we insist on only looking for and trading high probability trades.

In our particular trading example we are going to see instances of the guppy crossover and the guppy bounce back and using these we can choose the particular currency pair to trade.

The tools we are going to choose the currency to trade are

1. The multiple moving average as coded in xtick
2. Fibonacci retracement tool.

As you get more familiar with the multiple moving averages, you will notice that we use the multiple moving average bands to substitute Fibonacci retracements.

First forex trade in 2007

We see from the chart below at point A that the guppy was turning from short to long. Note that it is short if all the green moving averages are below the red moving averages. At point A the price moves above the all the red and green moving averages. This is a crossover.

Crossovers generally indicate a trend change and are the highest winning trades. However, trading trend reversals can be hazardous to your account equity. So we need to have confirmation of such reversals. What we do is to look for Fibonacci retracement areas and these are further confirmed by a retracement back to the green moving averages.

Using the simple method of using Fibonacci retracements, we see that from point A to point B we can get a retracement value of

1.2183 For the 0.382 retracement

1.2174 For the 0.500 retracement

1.2164 For the 0.618 retracement.

In the chart below we notice how the prices went back to our Fibonacci retracement points. At point C we note that the prices reached our 0.500 Fibonacci point at around 8. 35 am EST. We now know that this is a confirmed trend change and will be waiting to get our entry signals on the following happening.

1. Change of bar color from red to green

2. Change of either or both momentum and trend indicators turn green

3. Get a new white entry bar.

Our exits are simple too

1. Exit at the pivot point levels weekly R1 1.2267 and or daily pivot at 1.2230

As can be seen from the chart above, the price got to 1.2267 and entry was 1.2197 at point D for a total of 70 pips at point E.

In summary, it is very important to choose the pair to trade but the most important skill is choosing only the currency pair or pairs that work for the method. The method requires that the price goes back to the moving averages after a crossover in order to get the highest probability trade set ups