Unlocking Profitable Trades: A Guide to Granville’s Rules, Buy Signal 1, and Sell Signal 5. Technical analysis, market trends, and proven investment strategies
Trading Signals using Granville's Rules
Granville’s Rules have four buy-side trading signals and four sell-side trading signals, which show the relationship between the position of the moving average (200-day MA) and the price. These signals are usually illustrated using conceptual charts, but actual charts and examples must be used for technical analysis. This article summarizes the buy signal 1 and sell signal 5 that occur when a trend reaches a turning point (the start of a new trend).
Buy signal 1 and sell signal 5
Starting in September 2021, we will trace the daily candlestick chart of the EUR/USD to see the status of these signals and analyze the trend, the price range, and the period duration after the signals appear.
Buy signal 1 and sell signals 5 between March 2018 and September 2021
Price movement following a signal in EURUSD chart
Buy signal 1 and sell signals 5 between April 2014 and October 2017
Granville's Rules Trading Images Buy Signal 1 and Sell Signal 5
We employ buy signal 1 and sell signal 5 to assess trend initiation, aiming to capitalize on significant price differentials. However, instances may arise where the trend reverts to the moving average post-signal or false signals occur amid ambiguous market fluctuations and a lack of clear direction, necessitating thorough comprehension.
In addition, when trading on a daily candlestick chart, you must be careful when encountering ultra-long-term trades held for several years. In such cases, the deposit may be blocked for a long time and cannot be used. Deposit lock-up refers to the prolonged inaccessibility of funds tied up in a trade, restricting their use for an extended period. You can use the 4-hour or 60-minute candlestick chart according to the direction of the trend for swing trading or day trading.
Trading strategies
The effectiveness of buy signal 1 and sell signal 5 in capitalizing on price differences varies based on market conditions but can bring benefits from price differences. It is important to note that closing positions when the trend changes direction is a strategy, but relying solely on buying at sell signal 5 or selling at buy signal 1 may not consistently yield significant profits. Additionally, while the idea of avoiding profit-taking during the initial period is presented, it's crucial to recognize that market dynamics can shift, and prudent risk management may involve securing profits at opportune times rather than relying on prolonged price gaps.
Granville's Rules Trading Images Buy Signal 1 and Sell Signal 5-04
Buy signal 1 and sell signal 5 between March 2006 and August 2008
Above, we see an example of using the EUR/USD daily chart to trade according to the rules above. Entering at buy signal 1 (March 2006) and selling at sell signal 5 (August 2008) results in a profit from the price gap of about 2800 pips.
Next, we will examine sell signal 5 and the price movement following that signal.
Entry: -Sell at sell signal 5
Exit: Close at buy signal 1. Stop-loss limit orders are placed at the latest high
Sell signals 5 and Buy signal 1 between July 2007 and February 2012
Above, we see an example of using the USD/JPY daily candlestick chart to trade according to the above rules. Entering at sell signal 5 (July 2007) and closing at buy signal 1 (February 2012) results in a profit from the price gap of about 3900 pips.
