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Advanced System X2:

For some reasons, 365-period Simple Moving Average (SMA365) often acts as a price magnet & major support/resistance. Why? I don’t know. I just know it works.

And we can use it to make profits from the markets.

In this system, we use the following components:

1. 50-period Simple Moving Average (SMA50) applied to the Close.

2. 200-period Simple Moving Average (SMA200) applied to the Close.

3. 365-period Simple Moving Average (SMA365) applied to the Close.

Two conditions must be fulfilled:

1. SMA50 is above SMA200

2. We’ve got a bullish engulfing pattern or a hammer pattern form at/or near SMA65.

:

Two conditions must be fulfilled:

1. SMA50 is below SMA200

2. We’ve got a bearish engulfing pattern or an inverted hammer pattern form at/or near SMA65.

For long trades, stop loss should be placed at the nearest support.

For short trades, stop loss should be placed at the nearest resistance.

Exit when price stalls at major resistance, trendline, pivot points, Fibonacci projection target.

Or when bearish engulfing patterns or inverted hammer patterns form.

Exit when price stalls at major support, trendline, pivot points, Fibonacci projection target.

Or when bullish engulfing patterns or hammer patterns form.

We have a nice downtrend. And SMA50 crosses below SMA200.

Then price retraces, and touches SMA65 (the dark blue line). A bearish engulfing pattern then forms. We enter our short trade.

We exit our short trade when a hammer pattern forms.