Swing Trading Strategy For H4 Timeframe-Double Bottom Live Trade Example!

If you have been reading my previous post, you must be by now familiar with my swing trading strategy. I most of the time trade on the H4 timeframe as it gives me ample of time to plan my trade. My basic swing trading strategy is simple. I will enter long on a bullish divergence and continue in the trade as long as there is no bearish divergence. When I spot a bearish divergence pattern, I close the long trade and open a short trade. Now I will wait for a bullish divergence to appear. When I will spot a bullish divergence pattern, I will close the short trade and open a long trade. Please read the article on combining fibonacci levels with divergence first where I give the details of the bearish divergence.

As I had pointed out in that post price was going to break the 61.8% level which it did. It went below that level made a double bottom pattern on the H4 timeframe as well as the D1 timeframe as shown in the following screenshots.

Swing Trading Strategy For H4 Timeframe

As you can see in the above screenshot, a clear double bottom pattern is forming on the D1 timeframe. This time there is no confirmation from the fibonacci but this double bottom pattern is a pretty strong signal for a trend reversal. If you take a look at the RSI, I have drawn a yellow ellipse that is showing the double bottom pattern. RSI is a very versatile indicator that respects trendlines and also shows the patterns that are being formed on the price chart. More on RSI in future posts. You should become familiar with the double top and the double bottom pattern as it appears frequently and is a pretty strong signal. This is a good article on Double Top and Double Bottoms that you should read. Now in the above screenshot, both RSI and the Stochastic are also showing strong bullish divergence. Let’s switch to the H4 timeframe and check what is happening on it. Take a look at the following screenshot.

Swing Trading Strategy For H4 Timeframe

The three oscillators RSI, the Stochastic and the MACD are all showing bullish divergence. When divergence appears simultaneously on all the three indicators, it is a pretty strong signal. Now take a look at the following screenshot.

Swing Trading Strategy For H4 Timeframe

H4 timeframe is also showing a strong double bottom pattern. As you can see from the above screenshot, price is going up and up. Today is Thursday, tomorrow is Friday and the NFP Report release day. There is no bearish divergence pattern appearing on H4 timeframe. This means the market is bullish and the price is going to go up at the time of the NFP Report release. I will update on this tomorrow. After reading this post, you should have a clear idea of the importance of chart patterns and how to use them for confirming your signals. You should also understand that sometimes one thing works and sometimes other thing works. So last time Fibonacci levels confirmed our divergence signal and this time they didn’t help but the Double Bottom Pattern confirmed our divergence signals.