An Easy Signal Using Maximum Prices

This signal is basically the mirror image of the one using minimum prices I discussed yesterday, and while that one triggers short trades of the EUR/USD, this one signals long trades. While it's not the highest yielding signal you'll ever see, having these two complementary signals in your toolkit could make you a few pips now and then. Coincidentally, this signal just fired a couple days ago, predicting a long trade that made 64 pips on Monday, December 11.

Here's how it works:

Timeframe: Daily (24 hours)

Signal: If the previous trading day's maximum price is less than or equal to the closing price the trading day before that, a long signal is generated for the next trading day. So if it's the end of trading on Tuesday and Tuesday's maximum never exceeded Monday's closing price, a long trade would be signalled for Wednesday.

Tested out over 4+ years of data going back to September 2002, this signal would've generated 44 long trades (buying the EUR/USD pair) and 263 pips in profit after subtracting a 3 pip spread. Of those 44 trades, 25 would've ended positively, for 57% accuracy. If you combined this with the mirror-image short signal using minimum prices, you would've made a total of 81 trades and 769 pips in that time; not something I'd build an entire trading system around, but certainly worth keeping an eye out for when monitoring maximum and minimum prices.

I haven't tried these out on other currency pairs or timeframes, but I'll probably be testing them out with the GBP/USD soon.

Related topics:
An Easy Signal Using Minimum Prices
Signals Using Maximum/Minimum Prices