The strategy works best during American and European sessions when the market is highly volatile. Recommended instruments are EUR/USD and GBP/USD. The spread for these pairs is about 3 pips and the price can fluctuate daily by up to 100-200 pips. Recommended timeframe depends on the duration of a position, it can be M15 or higher. The potential profit for H4 timeframe can reach 300 pips per trade but requires patience and discipline.
Three Moving Average indicators with the period of 34 and Exponential method are applied to the chart. The upper MA is applied to High, lower MA — to Low and the middle one — to Close. Those lines form Tunnel Dragon indicator.
Long positions should be opened as soon as a candlestick closes above the upper MA and confirmation indicators (MACD or Stochastic) are directed upwards. Pending Buy Stop orders can be placed several pips higher than the High of the candlestick that closes above upper line of Tunnel Dragon.
Short positions should be opened as soon as a candlestick closes below the lower MA. Pending Sell Stop orders can be placed several pips lower than the Low of the candlestick that closes below the support MA of Tunnel Dragon. Additional indicators should confirm the downward trend.
Stop Loss orders should be placed 40 point lower than the open price. If the profit surpasses 50 points, stop-loss can be moved to the break-even zone. Lotsize can be increased after 20 profitable trades.
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