PARABOLIC SAR+MOVING AVERAGE REVERSAL STRATEGY

ETHUSD 30M - Expecting Bearish Bias
1-Divergence 2- Red candle bearish breakout 3-Red doji expect continuation 4-Macd crossover at doji+cross below 0 level line.
You are going to read about a trading strategy that uses the parabolic sar indicator {Default settings](Stop And Reversal) trading tool, along with two moving averages (20+40 sma) trading strategy to catch new trends on the reversal.
The strategy is a dynamic trading tool that is used by many professional traders of every market and time frame.
This was developed by Welles Wilder when he introduced this into in his book in 1978 that was titled, “New Concepts in Technical Trading Systems.”
What this tool basically does is helps traders determine when the current trend will end, or when it is about to end. The way it shows you this is by placing dots that show up above or below the price candle. They appear above or below the current candle for a specific reason. If the dot is above the candle it will be a SELL signal or down trend. However, if the dot is a below the candle this can be a signal to BUY or an uptrend. When the change occurs (the dot goes from below to above the next candle) this indicates a potential price reversal may be happening.
Some may think why not just trade the dots. When it reverses, just make an entry at that price. Technically you can trade like this, and may win some, but this is a very risky way to trade this indicator. You need other tools to validate this potential trend.
Which is why we use this indicator and two moving averages to determine an entry point. The moving average trading strategy will help verify that a reversal is in fact occurring.
The combination of these indicators will give you accurate trend reversal set ups. I will use other confirmation ideas also as indicated above.
Rule #1- Apply Parabolic SAR system and Moving Average indicators to chart
Rule #2- The Parabolic SAR Indicator must change to be above price candle.
Rule #3- Another element that must occur is the moving averages must cross over.
Rule #4- (Short Trade) Parabolic SAR dot must be above price candle AND moving averages cross to where 20 period MA is below 40 period MA.
Rule #5- Enter The Next Price Candle… Enter (SELL) the very next price candle after the dot appears above the candle. Waiting for one candle after makes sense because this proves to us that this reversal is strong. The moving averages are supporting the downtrend + the dot is signifying a down trend.
Rule #6- Stop loss / Take Profit
The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss.
Your exit criteria are when the 20 and 40-period lines cross over again. OR when the dot reverses appears at the bottom of the candle. So basically You can use either exit strategy.
Conclusion
As stated the Moving Average Trading Strategy can be used on any time frame. However, you should always check different time frames and look at what the market is currently doing. No strategy can give you a 100% win ratio so always be placing your stops at the appropriate areas. I would recommend practicing making both short and long trades with this moving average trading strategy.