Forex Trading Strategy – Combining Moving Average Convergence Divergence and Parabolic SAR

Written by Miroslav Marinov

Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

Here we provide a simple approach, with which only a number of currency pairs can be traded. Let us take EUR/USD. The time frame we will be using is 30 minutes. The indicators we will be using are the Moving Average Convergence Divergence (MACD) with its default settings (short term – 12; long term – 26; MACD SMA – 9) and the Parabolic SAR also with its default settings (0.02; 0.2).

A trader will usually look for a long entry, when the Parabolic SAR provides a buy signal, while the MACD main line crosses the MACD signal line from below to the upside.

A trader will usually look for a short entry, when the Parabolic SAR provides a sell signal, while the MACD main line crosses the MACD signal line from above to the downside.

A trader will usually look to close his/her position, when the MACD main line and MACD signal line cross again or the market demonstrates sideways movement for a while (trading range).

Below is an example of a long trade, based on this trading approach.