Day Trading Forex with S&R Zones
By Laurentiu Damir
Quick Summary
A concise, practical forex day trading system based on the 200-period exponential moving average for trend direction and support/resistance zones for entry and exit timing. Damir presents a complete trading methodology using the 4-hour chart for trend identification and the 1-hour chart for trade execution, with clearly defined rules for entry, stop-loss placement, and take-profit level determination. The system is designed to produce trades with small stop losses and high reward-to-risk ratios.
Categories
- Day Trading
- Forex
- Trading Systems
Detailed Summary
"Day Trading Forex with S&R Zones" (2012) by Laurentiu Damir is a 28-page trading system guide that presents a complete forex day trading methodology in a concise, rule-based format. Despite its brevity, the book provides a fully specified trading system with clear rules that leave little room for subjective interpretation.
The 200 EMA as Trend Filter: The system's foundation is the 200-period exponential moving average (200 EMA). The rule is binary: when price is completely above the 200 EMA, only look for buy setups; when price is completely below, only look for sell setups. Damir specifies that price should not be intersecting or oscillating around the moving average -- it should be clearly separated from it. If price is touching the EMA but quickly bouncing back in the trend direction, that is acceptable. But if price is passing through the EMA repeatedly, the trend is not strong enough and traders should look elsewhere. The slope of the 200 EMA must also confirm the direction -- it should be pointing up in an uptrend and down in a downtrend. A flat EMA indicates a range-bound market where this system should not be applied.
Multiple Timeframe Analysis: The system uses two timeframes. The 4-hour chart is checked first to determine the trend using the 200 EMA. If the 4-hour chart shows price above the 200 EMA with an upward slope, the trader then drops to the 1-hour chart. On the 1-hour chart, price must also be above the 200 EMA for buy setups to be considered. This dual-timeframe confirmation reduces false signals by requiring trend alignment across timeframes.
Support and Resistance Zones: Once the trend direction is confirmed, the trader identifies support and resistance zones on the 1-hour chart. In an uptrend, the trader looks for price to pull back to a support zone (a price area where buying previously emerged). In a downtrend, the trader looks for price to rally to a resistance zone. These zones are identified using recent swing highs and lows, areas of price consolidation, and previous breakout levels.
Entry Rules: The entry signal occurs when price reaches a support zone (for buys) or resistance zone (for sells) and shows signs of rejecting that level. Damir specifies looking for candlestick rejection patterns (pin bars, engulfing candles) at these zones as entry triggers.
Exit and Risk Management: Stop losses are placed just beyond the support/resistance zone, keeping them tight. Take-profit levels are determined by the next significant resistance zone (for buys) or support zone (for sells). The trade examples shown in the book demonstrate risk-reward ratios of approximately 1:4 to 1:8, with typical stop losses of 20-40 pips and profits of 200+ pips.
The system is notable for its simplicity and clarity. Damir provides multiple chart examples showing identical-looking setups, reinforcing that the system produces consistent, repeatable patterns. The book's value lies not in novel concepts but in the precise specification of rules that combine well-established technical analysis tools (moving averages, support/resistance, multiple timeframes) into a complete, actionable trading plan.
