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Murrey Trading Strategy Lines and Price Action

by TradingStrategyguides | Dec 15, 2017 | All Strategies | 0 Comments

The Murrey math trading lines strategy is the most attractive Forex trading strategy because it’s suitable for all time frames and it
can be used to trade di erent markets likes stocks, commodities and Forex currencies.
Murrey Math is a complex set of support and resistance levels that act more or less the same as pivot points but also they provide
some insights whether the current trend should continue or it should reverse. The Murrey math concept has been developed by T.
Henning Murrey in 1995 and has been described in great details in his book “The Murrey Math Trading System For All Traded Markets.”
First of all, we have to emphasize one of the main principles of Murrey math is that the markets behave similarly. So, the main
assumption is that the smart money behaves the same in all markets and hence why di erent markets have similar characteristics.

De ning the murrey math lines

The Murrey math is based on observations that were made by WD Gann in the rst half of the 20th century. The Murrey math was
inspired by the Gann theory and he created a system of geometry that can be used to describe market price movements in time. That
geometry facilitates the use of Gann trading techniques.
The Murrey math geometry is very elegant in its simplicity which makes the Murrey math trading lines strategy a perfect automatical
fractal trading system. The core element of the Murrey trading is that the price movement of any market will retrace in multiples of 1/8,
2/8 all the way up to 8/8. Since prices move in 1/8’s. Murrey math divides prices into 1/8 intervals.

Murrey Math Lines

The Murrey Math lines consist of 8 “pivot points” with each line having a di erent meaning to the price action. Essentially what the
Murrey math trading lines strategy does is to divide the price into 8 important levels with the 8/8, 4/8 and the 0/8 levels being the most
signi cant pivots.
Now…
Before we move forward, we must de ne the indicators you need to trade The Murrey math trading lines strategy and how to use
Murrey lines.
The only indicator you need is the:
Murrey Lines indicator which can be found on most popular Forex trading platforms (MT4 and TradingView) under the indicators
library.
The Murrey lines have nine main components or variables plus 6 extra pivots that can reveal extreme overbought or oversold
conditions and each of them will tell you a di erent story about the price action as follow:
· [+3/8]P – Imminent Bearish reversal
· [+2/8]P – Extreme Overshoot conditions, can reverse anytime
 · [+1/8]P – Overshoot conditions
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· [7/8]P – Weak level, place to stop and reverse
· [6/8]P – Strong pivot reverse
· [5/8]P – Top of trading range
· [4/8]P – Major support/resistance pivotal point
· [3/8]P – Bottom of trading range
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· [2/8]P – Strong, Pivot, reverse

· [1/8]P – Weak, place to stop and reverse
· [0/8]P – Hardest line to fall below, oversold conditions
· [-1/8]P – Oversold conditions
· [-2/8]P – Extreme oversold conditions, can reverse anytime
· [-3/8]P – Imminent bullish reversal

Now that we have a solid idea of what each of the Murrey lines represents it’s time to outline the Murrey trading rules. Without further
ado, this is a step by step guide to Murrey trading:
Murrey Math Trading Lines Strategy
(Rules for A Buy Trade)

Step #1: Check the 15-Minute Time Frame and Make Sure We’re Trading Below the
4/8 Murrey Lines (the Middle Blue Line)
The rst buying condition of the Murrey trading strategy that needs to be veri ed is that the price needs to trade below the 4/8 Murrey
Lines. While this strategy can be applied to all time frames for the purpose of this Murrey trading strategy we’re going to use the 15-
minute chart.
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The Murrey lines are dynamic pivot points that changes with owing price action which is one of the reasons why the price action
usually will be contained between 0/8 and 8/8 Murrey lines with the 4/8 pivot being the most important level.
It’s not enough for the price to trade below the 4/8 Murrey Lines which brings us to the next condition of the Murrey Math Trading
Lines Strategy:

Step #2: Once the Price is Trading Below the 4/8 Murrey Lines it Also Needs to
Trade Below the 2/8 Murrey Lines.
The main reason why we also need for the price to deep below the 2/8 Murrey Lines is because we need the price structure to create
space between the Murrey lines. This will ensure that once we break higher again, it will increase the probability of successfully
breaking through the 4/8 Murrey lines.
A picture speaks a thousand words, so here is what you should be looking at:

Now, all we have to establish is where to enter our long trade, which brings us to the next step of our Murrey Math Trading Lines
Strategy:

Step #3: Enter a Long Trade Once we Reverse and Break above the 4/8 Murrey
Lines.
The 4/8 Murrey line is the line in the sand for the buyers and sellers and has the ability to correctly signal a shift in the market
sentiment once it’s broken. In this regard, we want to enter with a buy market order as soon as we broke above the 4/8 Murrey lines.
Alternatively, if you want to be more conservative you can always wait for the breakout candle closing price to make sure it’s a genuine
breakout.

Now it’s time to learn where it’s the ideal place to hide our stop loss, which brings us to the next step:

Step #4: Place Your Protective Stop Loss Below the 0/8 Murrey Lines
The 0/8 Murrey lines is the hardest pivot for the price to fall below which is the reason why it’s the ideal place to hide our protective
stop loss order. There is also no need to add any extra bu er as we don’t want to lose more than it is necessary.
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Now, let’s move forward and establish where to take our pro ts:

Step #5: Take Partial Pro ts (Preferably 50% o Your Entire Order) at 6/8
Murrey Lines and Also Move the SL to BE
The 6/8 Murrey line is the rst strong pivot from where the price can reverse so we want to take our pro ts right there. At the same
time, the next action that you need to take is to protect your remaining position by moving your SL at BE.

Now let’s move forward and see where we should liquidate the remaining part of our trade.

Step #6: Take Final Pro t at 8/8 Murrey Lines

Finally, we have to close our trade once we reach the 8/8 Murrey lines which is the ultimate resistance level, signaling extremely
overbought conditions in the market.

It’s important to mention that if the market is breaking the 4/8 pivotal point multiple times on both sides, it’s best to wait until you can
clearly apply Murrey trading setup by applying the Step #1 through Step #3.
 Note** The above was an example of a buy trade using the Murrey Math Trading Lines Strategy. Use the same rules – but in reverse –
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some of the trading conditions you want to avoid in the forex market.
Conclusion
The Murrey Math Trading Lines Strategy is the ultimate support and resistance system because unlike the simple support and
resistance levels the Murrey lines are mathematically driven and possess a greater in uence on how the price reacts to each of these
levels.
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The same Murrey trading principles outlined throughout this article can be applied to any instrument because according to Murrey
“all markets behave in the same manner akin to a herd,” and can be used on any time frame so that it can t your trading style.
Thank you for reading The Murrey Trading Strategy

Please leave a comment below if you have any questions about Murrey Trading Strategy!

Also, please give this strategy a 5 star if you enjoyed it!

(2 votes, average: 5.00 out of 5)

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