If you're a trader who loves to dive into the smaller timeframes, then you might want to check out the Pipsover strategy. This approach relies heavily on the Chaikin indicator, which you can grab HERE. The default settings are tailored for trading USDCHF on the M5 timeframe.
The core of this strategy is all about identifying potential trend reversals or pullbacks using the Chaikin indicator along with a 20-period moving average. So, here’s the deal: we monitor the Chaikin value and when it breaks a certain threshold, indicating that the price has moved beyond the moving average while the previous candlestick shows a reversal, we can anticipate a pullback or a trend reversal. When this happens, we enter a trade in the direction of the previous candlestick. If we open a position and then suspect a reversal back in the opposite direction, we can hedge our position with a counter-trade. This way, if a strong trend breaks through one of our stops, we might just snag some extra pips.
You might wonder, why not use the RSI instead of the Chaikin indicator? Well, here’s the scoop: the RSI doesn't account for market activity and only looks at price ranges. In contrast, the Chaikin indicator factors in volume. During a rising trend, the RSI may repeatedly signal that the market is overbought, while in a falling trend, it suggests oversold conditions, essentially working against the trend. If you try to spot reversal moments using the RSI, you’ll likely encounter a lot of false signals before the actual trend reversal occurs. Plus, in a sideways market, the Chaikin indicator outperforms the RSI every time.
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