Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

RichardCox

The Blade Runner Strategy

Recommended Posts

The Blade Runner Strategy

 

Many traders on this forum are likely fans of the sci-fi classic BladeRunner, Ridley Scott’s dystopian depiction of future world increasingly dominated by artificial intelligence. So, it might come as little surprise that there is a forex technical analysis strategy boasting the same name. The strategy relies heavily on the position of market prices relative to the historical averages. It could be argued that the majority of technical analysis strategies start with a basis that is vaguely similar. But variations on the Blade Runner strategy that employ the use of the forex polarity indicator offer a somewhat unique approach to moving averages. Here, we will look at some of the factors involved when forex traders place trades using the Blade Runner method.

 

Basic Concepts

 

Trading signals generated by the Blade Runner strategy are based on pure price action. Off-chart indicators are not needed, but can always be added as a source of added confirmation. Instead, most of the focus is placed on price activity itself, which means that the use of support and resistance levels, pivot points, and candlestick formations might prove beneficial when looking for new opportunities.

 

In most cases, the Blade Runner Strategy uses a 20-period exponential moving average (EMA) or the middle line of the 20-period Bollinger Band. Time frames can vary, but many traders argue that the strategy is better-suited to short-term charts as it provides signals for quick entries and exits. The term “Blade Runner” is used because the EMA (or Bollinger Band middle line) cuts through price activity and provides a reference point for the trading signals that are sent.

 

Trading Signals

 

The trading signals that are sent using this strategy are sent when prices convincingly trade above or below the EMA, and then test the EMA on more than one occasion. Below, we will look at two examples in the bullish and bearish directions. First, we will look at a bullish example using a daily chart in the EUR/USD:

 

53jz92.png

 

Here, we can see that prices have tested the 20-period EMA on five separate occasions before stalling out toward the right of the chart. Bears are not successful in convincingly driving prices below the 20-period EMA. This sets the stage for further rallies later, once markets consolidate and correct themselves in-line with the longer-term trajectory. Once a signal like this is spotted, it becomes increasingly likely that prices will reject to the topside, once the period of sideways consolidation (found at the right section of the chart) has completed.

 

In the next EUR/USD chart, we can see how this scenario might unfold:

 

xfsowj.png

 

Here, we can see that the initial rally then encounters its periods of corrective consolidation. This period gives the market the energy it needs to propel itself further once the averages have corrected. Long positions could have been taken in this scenario, and carried for profits until the final candles on the chart, which is where prices convincingly break in the bearish direction.

 

Rules for the Bullish Entry:

 

  • Price activity moves convincingly above the 20-period EMA
  • Prices test the EMA from above on multiple occasions
  • Prices enter a period of consolidation
  • Prices then finally break back convincingly above the EMA
  • Trades are closed once prices convincingly fall below the EMA

 

Bearish Example

 

Next, we will look at a bearish example using a daily chart in the USD/JPY:

 

15mejd3.png

 

In this scenario, we have a somewhat more volatile example that shows signals in the bearish direction. We can see that prices have tested the 20-period EMA from below on four separate occasions before stalling out toward the right of the chart. Bulls are not successful in convincingly driving prices above the 20-period EMA. This sets the stage for further declines later, once markets consolidate and correct themselves in-line with the longer-term trajectory. Here, it becomes increasingly likely that prices will reject to the downside, once the period of sideways consolidation (found at the right section of the chart) has completed.

 

In the next USD/JPY chart, we can see how this scenario might unfold:

 

35i6eed.png

 

Here, we can see that the initial decline later encounters its periods of corrective consolidation. This gives the market the energy it needs to propel itself further once the averages have corrected. Short positions could have been taken in this scenario, and carried for profits until the final candles on the chart, which is where prices convincingly break in the bullish direction.

 

Rules for the Bearish Entry:

 

  • Price activity moves convincingly below the 20-period EMA
  • Prices test the EMA from below on multiple occasions
  • Prices enter a period of consolidation
  • Prices then finally break back convincingly below the EMA
  • Trades are closed once prices convincingly rise above the EMA

Of course, there are variations on these rules -- as there are with any forex technical analysis strategy. Next, we will look at one of these variations. Specifically, we will look at the ways trades can be constructed when we add the Forex polarity study.

 

Adding the Forex Polarity Study

 

Some traders are reluctant to try any strategy that employs a single trading signal. There is good reason for this, so next we will look at some of the ways traders can add Bollinger Band readings in order to gain added confirmation. This is also referred to as using the Forex Polarity study, which juxtaposes the 20-period EMA along with the middle line in the 2-deviation Bollinger Band.

 

Here, we will look at a bullish example of this combination using a daily chart in the GBP/USD:

 

rmtr1u.png

 

In this chart, we can see that the GBP/USD encounters a period of consolidation toward the left side of the chart The 20-period EMA and the middle like of the 2-deviation Bollinger Band are then viewed in combination. Once prices forcefully rise above this combined signal, we have a scenario that lends itself to bullish trades and long positions for the currency pair in question.

 

This chart might appear complicated and difficult to understand at first glance. There are Metatrader indicators that plot the 20-period EMA and the middle line of the 2-deviation Bollinger Band, and this can make the entire structure easier to understand and assess at first glance. But we have plotted all relevant indicators together here for better frame of reference and understand how all of these indicators work in combination with one another.

 

When a bullish signal like the one shown in the chart above becomes apparent, it becomes more likely that markets will experience additional upside in the trading periods ahead. This combined signal might be viewed as more valid, given the combined nature of the indicators involved. Most traders prefer not to use any trading signal in isolation, and many of these difficulties can be solved when using the Forex Polarity study as opposed to the 20-period EMA by itself.

 

Conclusion: The Forex Blade Runner Strategy Offers a New Spin on the Traditional Moving Average Strategy

 

In all of these ways, forex traders can use the Blade Runner strategy as a means for offering a unique take on the traditional moving average strategy. There are rules in place for the bullish and bearish versions of this strategy, and each of these steps should be honored before any real-time trades are placed. Most technical analysis strategies employ moving averages in some shape or fashion. But when we look at the rules established for the Blade Runner approach, alternative variations (and trading signals) can be identified.

Image1.jpg.bbb43e3fb0f99a3317c6b210517f8b0b.jpg

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 22nd November 2024.   BTC flirts with $100K, Stocks higher, Eurozone PMI signals recession risk.   Asia & European Sessions:   Geopolitical risks are back in the spotlight on fears of escalation in the Ukraine-Russia after Russia reportedly used a new ICBM to retaliate against Ukraine’s use of US and UK made missiles to attack inside Russia. The markets continue to assess the election results as President-elect Trump fills in his cabinet choices, with the key Treasury Secretary spot still open. The Fed’s rate path continues to be debated with a -25 bp December cut seen as 50-50. Earnings season is coming to an end after mixed reports, though AI remains a major driver. Profit taking and rebalancing into year-end are adding to gyrations too. Wall Street rallied, led by the Dow’s 1.06% broadbased pop. The S&P500 advanced 0.53% and the NASDAQ inched up 0.03%. Asian stocks rose after  Nvidia’s rally. Nikkei added 1% to 38,415.32 after the Tokyo inflation data slowed to 2.3% in October from 2.5% in the prior month, reaching its lowest level since January. The rally was also supported by chip-related stocks tracked Nvidia. Overnight-indexed swaps indicate that it’s certain the Reserve Bank of New Zealand will cut its policy rate by 50 basis points on Nov. 27, with a 22% chance of a 75 basis points reduction. European stocks futures climbed even though German Q3 GDP growth revised down to 0.1% q/q from the 0.2% q/q reported initially. Cryptocurrency market has gained approximately $1 trillion since Trump’s victory in the Nov. 5 election. Recent announcement for the SEC boosted cryptos. Chair Gary Gensler will step down on January 20, the day Trump is set to be inaugurated. Gensler has pushed for more protections for crypto investors. MicroStrategy Inc.’s plans to accelerate purchases of the token, and the debut of options on US Bitcoin ETFs also support this rally. Trump’s transition team has begun discussions on the possibility of creating a new White House position focused on digital asset policy.     Financial Markets Performance: The US Dollar recovered overnight and closed at 107.00. Bitcoin currently at 99,300,  flirting with a run toward the 100,000 level. The EURUSD drifts below 1.05, the GBPUSD dips to June’s bottom at 1.2570, while USDJPY rebounded to 154.94. The AUDNZD spiked to 2-year highs amid speculation the RBNZ will cut the official cash rate by more than 50 bps next week. Oil surged 2.12% to $70.46. Gold spiked to 2,697 after escalation alerts between Russia and Ukraine. Heightened geopolitical tensions drove investors toward safe-haven assets. Gold has surged by 30% this year. Haven demand balanced out the pressure from a strong USD following mixed US labor data. Silver rose 0.9% to 31.38, while palladium increased by 0.9% to 1,040.85 per ounce. Platinum remained unchanged. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news. Andria Pichidi HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • A few trending stocks at support BAM MNKD RBBN at https://stockconsultant.com/?MNKD
    • BMBL Bumble stock watch, pull back to 7.94 support area with high trade quality at https://stockconsultant.com/?BMBL
    • LUMN Lumen Technologies stock watch, pull back to 7.43 support area with bullish indicators at https://stockconsultant.com/?LUMN
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.