The Euro currency futures presented an excellent example of using ADX indicator with the ATR indicator for a great trade.  Whenever we have an ADX indicator showing a magenta peak on the 45 minute chart the expectation is that price will retrace back to the ATR indicator on the 45 minute chart.  What does this look like on the 3 minute — a Buddha trade.

Using ADX Indicator for Trade Entries When Price is at the ATR Indicator

When using ADX indicator for identifying a trade entry at the ATR indicator on the lower timeframe, the market is typically either overbought or oversold.  The specific criteria for these overbought or oversold conditions are:

  • Higher timeframe makes an ADX magenta peak
  • Look at color of ADX line
  • ATR on lower timeframe must be the opposite color (ie if the ADX line is red, the ATR on lower timeframe must be blue)
  • Price must retest the ATR indicator (preferably on lower volume)

What do these trade setups look like?

using adx indicator with atr indicator

45 Minute ADX Magenta Peak

Euro Retracement TradeThe THD Strategies automatically highlight the entries for you. The ADX strategy identifies when price is about to begin a retracement.  Then we look to the lower timeframe ATR strategy to identify the entry, stop, profit target and has two built-in trailing stops.  One stop is based on the ATR stop indicator and the second stop kicks in once a minimum profit target has been achieved.  Then the stop follows price closer to get more profits.

The THD Strategies will be available soon on a subscription only basis (either quarterly or annually) for clients that have the indicators.  Of course with our new subscription service, clients will always have the latest indicators, online training courses, and access to a weekly webinar on Mondays from 10am till noon.