TREND WITH STOCHASTICS

Hello again,

I know a lot of people dont believe you can use stochastic as a trend following indicator. mmmmh officially that is true, but practically i think it is not always true. I want to believe its a matter of timeframe. Take a look at the chart below. It shows the crosses of the stochastics in the daily timeframe. I have vertical lines to indicate the begining of the cross and the end. Have a look at the chart below - its daily time frame

Now same price action in the 1hour timeframe below here shows that the general trend is up.

So, within this period i will advise you trade only long trade until you have otherwise in the daily timeframe. So looking on the hourly time frame and below you look for BUY chances only. With this i believe  you can comfortably use stochastic for trend analysis.

Now to explain the main Trading Strategy with stochastic. Special thanks to Egudu Emmanuel. He made me start this research work and i came up with the details below:

INDICATOR: Stochastic (60,36,18) - 4hours and 15min time frame
                       Commodity Channel Index (13) in the 1 hour time frame.

Apply the stochastic on your 4hour and it should look like the chart below, i am using today's trade as an example.

The trend is defined to be up so i need the 1hr timeframe with the Commodity Channel Index (13) getting over-sold. At the point marked red is over sold then i move to the 15min timeframe.

Below is 15min timeframe you can see the stochastic is trying to cross up still in sell mood. That is what you need dont wait for it to cross up.

While its over sold and turning up, get the nearest swing high and place your pending order for BUY. That is it. You sense of support and resistance can help your Stoplosses and Take Profits.

Thank you.