With this strategy, you are using a 2-period ADX to catch low-risk entries in a trending market.
Let's look at an example. Looking at the chart, we have a nice bullish trending session. The purple line is the 20-period EMA and the lower panel shows the 2-period ADX. From below the moving average, price rose and broke above the swing high. That was our signal that a bull trend has begun.
After rising for several bars, price started to pull back. The pullback consisted of many narrow range bars, which stayed above the EMA. The bullishness remained intact. The 2-period ADX fell below 25. We bought when price broke above the high of the signal bar. We place the
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