ZLSMA AO Session Strategy by kernchentrading

Strategy Logic

Trend Filter:
The ZLSMA is used to determine the prevailing short-term direction. Long signals are only considered when price is above the ZLSMA, while short signals are only considered when price is below it.

Momentum Confirmation:
The Awesome Oscillator is used to detect momentum shifts. Entries occur only when a multi-period sequence of rising or falling AO values is present, indicating the start of a new impulse.

Entries:

Long: Positive momentum in the AO combined with price trading above the ZLSMA

Short: Negative momentum in the AO combined with price trading below the ZLSMA

Only one position per direction is held at any time.

Exits:
Positions are closed when momentum weakens according to the AO or when a predefined pip threshold is reached.

Trading Hours:
The strategy uses a time filter and trades only during specified hours to avoid periods of low liquidity.

Parameters

ZLSMA length and offset

Position size (volume)

Timeframe and Notes:
I trade Gold using this strategy on the 5-minute and 15-minute charts. In flat, sideways market conditions, the ZLSMA has weaknesses. In such cases, it can be helpful to use an additional trend strength indicator (e.g., TSI). In general, the greater the distance between price and the ZLSMA, the more reliable the signal tends to be.