The Number One Handbook on Trend Lines in Forex Part 5

Our series on TREND LINES (TL) in the Forex market continues with part 5! Today we focus on solving potential problems that could occur when using trend lines (TL) in real live Forex trading. There is a difference between the “perfect theory” and “actual implementation” and this part tries to bridge the gap.

If you would like review the previous parts of the series on trend lines, please click on these links:

• Part 1


• Part 2


• Part 3


• Part 4

In this post problems and answers will be compiled to help traders with solving practical issues.

PROBLEM 1 SHALLOW TREND LINES (TL)

Is it possible to trade very shallow trend lines? Yes but with caution. The danger of very shallow trend lines is the fact that a horizontal support and resistance (S&R) is close by. When price breaks through one layer of S&R, the horizontal level could stop price from continuing. There are a few ways to handle it:

1. Take the TL break and ignore the horizontal level;
   
   
   
   1. Good for small pauses in overall big trend;
   
   
   2. In strong trends price keeps pushing and previous S&R was only a short stopping point for further trend continuation;
   
   
   
   

• Wait for a strong candle close (near high or low) to break TL and/or horizontal level;

1. Good if there is doubt about S&R strength;


2. Most useful if trend line correction is relatively big compared to trend;

• Wait for the horizontal level to break;

1. With strong S&R levels it could be better to wait for an actual break of that level;


2. A risk of a false break out is always present, which can be partially countered by waiting for candle stick confirmations (see B);

• Skip the setup and move on to new currency pairs.

Method A is the most “aggressive” and D the best “conservative.”

PROBLEM 2 STEEP TREND LINES (TL)

Steep trend lines are often viewed as more difficult to trade. It is true that steep trend lines tend to break quickly but without necessarily moving much to the opposite direction. Steep trend lines are most useful to trade when price is going against the bigger trend. In these cases, a break of steep trend line could equal to a completed retracement and a bigger trend continuation. Trading breaks of steeper trend lines against the trend is extremely dangerous and only very seasoned traders might attempt it. Steep trend lines however could be a good method to trail stop a trade (locking more profit along the way).

PROBLEM 3 HORIZONTAL TREND LINES (TL)

Trading the break of a horizontal support or resistance line can especially be troubling because price often encounters volatility upon the break. Price breaks a bottom or top but then quickly reverts to the opposite direction, which can be a very frustrating and painful experience. I see this particular pattern occur often on the GBPUSD.

Any breakout is vulnerable to a pullback – immediately (dark green example) or later on (light green example). Only in some cases does price continue flawlessly (blue). As a Forex trader our options are limited but we can use:

• Candle closes and wicks to measure strength of break;


• Divergence to determine if there is any weakness;


• Multiple time frame analysis to zoom in and out and see the break from various angles.

EXERCISE: practice the above by finding a trend and drawing shallow and steep trend lines on it. Post the chart down below.

PROBLEM 4 HOW TO MEASURE DEGREES

In various parts of this series on trend lines I mentioned that trend lines have various angles. It is important to emphasize that the measurements are rough approximations and certainly not a precise figure. When I write that shallow trend lines have 0-10 degree angle, this is just used as a rough indication. The most important is to realize that there are shallow (outer), normal (trend), and steep (inner) lines.

PROBLEM 5 HOW MANY TREND LINES TO DRAW

I like to draw many trend lines in all directions: the more the better because extra information is available. It really does not matter if the trend line is angled up or down and whether there is a range or up/down trend. BUT… Forex traders must keep a balance and ensure that the chart does not become overcrowded; otherwise this could lead to paralysis of analysis during trading.

Basically, I am happy to keep as many trend lines on the chart as long as the trend line is relevant and I can keep a clear vision of the charts with each trend line. Here are some extra pointers:

• Drawing multiple trend lines is a great benefit because the lines provide a zone of support and resistance rather than just a single point of reference (like a fan).


• Using the same top or bottom twice or three times for different trend lines is perfectly fine.


• The trend line does not have to start at a top or bottom but could be from the middle of a swing as well, as long as it adds values, has sufficient hits and is near price.

Ultimately if I do need to remove trend lines to make the charts more readable, I make decisions based on how many price hits the trend line has, how close it is till price, and how neat (wicks/candle outside) the trend line is. In the screenshot below I drew a ton of trend lines but not all of them need to be on the chart. The orange ones can be easily removed either because current price is far from the trend line or the information is too duplicated. The purple trend lines could be the ones that are left on the chart after the orange ones are gone. This is just an example; some traders might add or remove more trend lines depending on their personal preference.

EXERCISE: practice the above by drawing multiple trend lines and show which charts are ok (purple) and which ones are irrelevant (orange). Post the chart down below.

NEXT WEEK’S GOAL

Next week’s article (part 6) will continue with more problem solving of trend lines and also dive into the real practical side of trend lines. What are the best ways of using trend lines? What trade setups are possible with trend lines? That and more can be found in part 6.

Don’t forget to post the exercises down below. Thanks for sharing this article and wish you Happy Trading and a nice weekend.

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Why Forex Traders must Embrace the Road Map

Occasionally you will see a post referring to my prediction of potential big price movements. I did this with the USD strength (here), the Gold weakness (here), the Aussie weakness (here) and the Yen weakness (here). As an analyst and writer it makes sense to provide our readers with a heads-up of potential major trends in the future. But the information itself does not generate profits – only trading can.

REACT; DON’T PREDICT

Forex traders want to let the market move wherever it wants to, then they should base their reaction (plan) on that price action. Never do we want to solely trade a prediction and ‘hope’ that the market confirms our analysis. This sets up Forex traders with tons of emotions and quickly imbalances their execution of a(ny) plan. We have to accept the fact that we, as traders, cannot ‘control’ the market, which means that we are always unsure about our trade developing (but we don’t have to be unsure about our trade!).

The best way to generate consistent Forex profits is by setting up a trading plan and following that plan. End of story -regardless of whether your entry and exit plan is built on a discretionary or non-discretionary method.

ROAD MAP READERS

Forex traders are more like road map readers: they are trying to find the quickest and safest way on the map from point A to point B. The graph is a trader’s compass and candles, patterns, trends, support and resistance are clues that traders find along the way. The way we use those clues depends on our plan. There is no need and time for second guessing and second doubting.

Of course, all of our readers do not share a common trading plan, but let us take an example of the AUDUSD. As a discretionary trader, I have biased for shorts because of the strong downtrend and bearish momentum prior to the diamond chart pattern consolidation.

AUDUSD CHARTS

The trend itself is not sufficient to justify a short – especially if price itself is reacting bullishly. I might want price to go down or think it ‘certainly’ will, but this does not justify taking a trade and hoping for the best. As a road map reader (discretionary one in this article), I am waiting for confirmation clues that price is indeed turning back into a bearish mode or already in it. And until those confirmations are seen on the chart, I need to stay disciplined and patient so I can avoid unneeded pain or losses by jumping in the market too early.

There are many different types of confirmation clues such as break or bounce of trend lines, extremes in oscillators, divergence, price action, chart patterns, candle sticks and just plain candles. In this case I will be waiting for false bullish break out and wait for a 4-hour or daily rejection candle stick or candlestick pattern as price moves up. The other signal could be the bearish break of the consolidation.

Do you agree with the map reader philosophy? If yes, why? If not, why not? Share your views with the WET community! What tools and indicators do you use to keep your focus on map reading?

Thanks for sharing and Happy Hunting!

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Actively Applying Trend Lines to 4 Forex Charts

During the recent weeks Winners Edge Trading has released an entire series on trend lines and how Forex traders can use trend lines for their trading decisions. This article will use these trend line articles to review and analyze today’s Forex market and make a watch list of interesting pairs and setups.

#1 GBPAUD

The GBPAUD is in a chart pattern called the contracting triangle or wedge. Price is posting higher lows but also lower highs, which is a classical sign of a range. So which trend lines are important?

The red and dark green trend lines are the main ones to monitor: a breakout above resistance or below support is the main breakout scenario although waiting for the confirmation of a break is also merited. The other trend lines are good to keep on the charts to remember where the targets are located.

#2 USDCAD

The USDCAD is also caught in a tight consolidation zone. The green trend lines represent the falling wedge chart pattern which is often a reversal signal. The longer term trend is certainly still pointed up (green arrow) so a break of the falling wedge could indicate the continuation of the bullish momentum.

1. Bullish space is visible above the rising wedge and resistance (green zones);


2. Bearish space is visible up on the break of support (blue & green) trend lines (red zones);


3. Price is now in ‘neutral’ territory (blue zones).

#3 EURUSD

The EURUSD downtrend gave way for a massive bear flag consolidation (blue channel lines). Price is clearly at a decision spot:

1. The break of support for a bearish setup or;


2. The bounce at support for a bullish rally and further extension of the consolidation.

The screenshot shows you where I mentally have placed the bullish, bearish, and neutral zones (circles) and likely bouncing spots (arrows) depending on the trend lines:

#4 GBPJPY

The GBPJPY is rebounding back up strongly after an even sharper decline. The ‘Ferrari’ of the currency market has stalled at the -27.2 target after bouncing at the 38.2 Fibonacci retracement level. If price is able to make it up towards the -61.8 target then it would need to break through various layers of resistance. Bearish territory is only visible after a break of various support lines and channels. Please see this screenshot for the full visual picture.

Remember that these 4 currency pairs have interesting trend lines but before they can be actually traded it is always recommended to wait patiently for confirmation of one’s analysis as to remove the bias from our views on the charts and potential setups.

As our help to traders, we are offering you the opportunity to post your charts and got review for free of charge: pick a chart and draw all of the relevant trend lines on it. If possible, indicate or write which zones are bearish, bullish or neutral. Then after that we will post our feedback on it. Looking forward to your charts!

Thanks for sharing and wish you Happy Trading!

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4 Ways of Reviewing the Forex Majors

The bullish US Dollar trend is losing steam against the other majors – especially against the Japanese Yen, followed by the Euro and then the Pound. Today’s post will analyze the majors with trend lines, Fibonacci levels, price action, and candle stick formations as the main tools.

GBPUSD

Momentum: so far the momentum has been strongly bearish but the candle sticks are not clearly as bearish as when the momentum started.

Candle stick: weekly chart is showing a bullish weekly pinbar. The wick at the bottom is a majority of the candle (85%), which indicates that bulls regained control during last week’s trading.

Fibonacci: price is at a 50% Fibonacci retracement level (+/-1.60) of the last bullish swing high and swing low, which could be a potential bouncing spot.

Trend lines: 2 purple trend lines connect the tops and bottoms and show a potential falling wedge chart pattern, which is a typical pattern when a reversal takes place.

With the above mentioned observations in mind, is there any trade setup? The signals are mixed so there is not a clear cut favorite, but in general I would split the chart into these bullish and bearish zones & bounces:

EURUSD

Momentum: the momentum has been strongly bearish.

Candle stick: bullish candle sticks are indicating potential struggle for the bearish trend.

Fibonacci: when placing a Fibonacci retracement tool on the last bearish swing, price could continue in its bearish trend from the 38.2 Fib level.

Trend lines: the rising wedge trend lines have seen a massive break but bigger wedge lines are still intact. The next major support is the bottom of the wedge.

With the above mentioned observations in mind, is there any trade setup? Yes, a short from the 38.2 Fibonacci retracement level down towards the bottom of the weekly wedge. The 38.2 Fibonacci level is near the 1.30 psychological round figure so a stop loss could go above 1.30 or above the 50 Fibonacci level.

USDJPY

Momentum: the up momentum has given way to a down momentum, which could be a correction of the bullish swing high and swing low (August 8 – October 1).

Candle stick: bullish recovery after bearish momentum.

Fibonacci: daily candle stick wicks at the 50% Fibonacci retracement level.

Trend lines: there are breaks to both sides but the most recent break was bullish and price is still above the outer trend line (magenta).

With the above mentioned observations in mind, is there any trade setup? With the bounce at the 50 Fibonacci retracement level, I am keener on longs but only after the next resistance level (blue) breaks. Stop loss could be below the 50 Fib. The first target is the top and the 2^nd target is the -27.2 Fibonacci level.

What zones and bounces do you see on the majors? Which pair is the best setup for your trading this week? You are able to share your views down below.

Thanks for reading and Happy Trading this week!

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Understand Current Trends to Make a Profit for Forex Traders

Good trends are hitting the Forex market and creating interesting conditions for Forex traders. For instance, the US Dollar strength is rocking the market strongly. The times when the EURUSD was knocking on the doorsteps of the 1.40 level seem ages ago and price in the meantime has hit the 1.25 level.

There is another trend that should not go unnoticed: the Australian Dollar weakness during the month of September. This time around we are reviewing the GBPAUD as the AUDUSD has already been analyzed in an earlier post of this week (click here).

The Great British Pound in fact is probably the 2^nd strongest in the market as of late. It is losing the least ground versus the USD, beating the EUR and NZD, roughly even against the JPY and dominating the AUD (Australian Dollar).

WEEKLY ENGLUFING TWINS

The bounce off of the 38.2 weekly Fibonacci retracement level can simply be described as massive. That momentum is still dominating the GBPAUD as each subsequent weekly candle posted higher highs and higher lows. Weekly engulfing twins at a confluence of Fibonacci levels (38.2 retracement and -27.2 target) can be very powerful!

The good news is that last week’s high has again been broken. With intra-week resistance out of the way, there could be awesome trade potential for intra-week and intra-day traders . Let’s zoom in!

UPTREND CONFIRMED

The 4 hour uptrend is confirming the bullish weekly candles – although if you look closer at recent price action, it becomes noticeable that the current trend angle is significantly shallower (red lines) compared to the beginning (green lines). Also, price does not break as far above resistance (purple circles on top of candles) as it did at the beginning of the uptrend.

Conclusion: price is in an uptrend but showing signs of slowdown.

Warning: this is where reversal traders often lose out a lot as they start to anticipate trend reversal way too soon. They strike out a dozen times and then do not take the actual reversal because of the previous failed attempts.

Solution: the trend is still UP. Focus on long trades unless very strong and clear momentum is present.

ENTRY OPTIONS

The break of the falling wedge chart pattern (purple lines) just at/above support (green line) was a great trade setup. Now it could be a good moment to wait for the pullback and continuation.

I will place a Fibonacci retracement key (orange) on the current swing high and swing low, which could have to be moved to the new top if price continues with its higher highs and higher lows. Any of the Fibonacci levels could be a good entry.

The very best reward to risk ratio is at the 88.6 Fibonacci level, but there is not a high chance price could retrace that deep. The 88.6 Fib is also the armpit level (blue line), which provides extra confluence.

But basically any of these Fib levels could be the bouncing spot for trend continuation. The best is to wait for candle stick chart patterns as a confirmation that price is bouncing at one of the Fib levels.

Stop loss should be below the swing low. Take profit at the -27.2 Fibonacci target and/or trailing stop loss of 1 hour bottoms.

Are you keeping an eye on this pair? What specific tools would you add to the analysis?

Happy Trading!

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Are you struggling in Forex? I am a full time Price Action Forex trader, ask me anything.

I know a lot of you are struggling with Forex and with Price Action. Forex can be hard to get a handle on, especially at times like this when volatility is constantly changing.

So if you want help or advice, leave a comment below. Tell me what you are struggling with in Forex that is keeping you from being consistently profitable.

I will read and reply to every comment. So if you want my advice, tips or help now’s the time to ask.

NickB’s Forex Blog

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Great Forex Alert System for 28 Pairs

Forex traders need accurate entry signals so their trade entries can be go into positive pips and stops can be moved to breakeven. Accurate signal systems should provide accurate trade entries and these trading alerts should be in real time.

The Forex Heatmap will provide you with accurate visual signals for buying and selling 28 pairs.

We also have a free list of trading tips for forex traders that will enhance your day to day forex trading experience.

Good Trading

Forexearlywarning.com

Forex Forum @ DailyFX – Blogs

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GBPUSD Bears and Bulls Wrestling For Control in Forex Market

The GBPUSD showed a strong reversal candle last week Friday. The bears were totally in control that day due to the massive wick on top of the candle and the candle close very near the low. Despite the reversal signal, price has not been able to break the low nor the high of that Friday daily candle: price has made four inside candles in a row (purple box in screenshot). What is next for the Cable: will the intermediate uptrend trump the longer-term downtrend or will it be the opposite?

We saw some great comments and analysis on Nathan’s NZDUSD contest question. Although no prizes are dealt out for this one, I am hoping to see the same participation: will the GBPUSD hit the top (blue) or the bottom (red) first? Please post your comments down below!

MY VIEW GU WEEKLY

The weekly chart shows a strong uptrend which is followed by a very impulsive fall (green arrow and red arrow on chart). A pinbar near the 50 Fibonacci level (blue arrow) could spell trouble for the bears but last week’s candle had a big wick on top of the candle (purple arrow). Conclusion: both sides seem to be struggling for control on the weekly chart.

MY VIEW GU DAILY

The daily chart is showing a different picture. The downtrend is visible and evident with clear lower lows and lower highs (red circles). The retracement rally however has posted a higher low (blue circle) in the mean time, which is indicating a wedge (red and blue lines). A wedge is always a sign of indecision.

MY CHOICE: BREAK TO THE DOWNSIDE

There are, however, a few factors that make me favor the downside break of the wedge.

1. There was strong bearish moment and downtrend prior to the wedge. There is a (slightly) higher chance that this bearish momentum will push price back into another bearish fall.


2. The very last part of the bearish trend (prior to the wedge) was the strong and steepest price action of the entire downtrend. This too increases the odds of the downtrend prevailing.

MY CONFIRMATION

I am placing importance on the bearish candle of the Wednesday’s daily candle. In my opinion that candle shows a decent chance of downtrend continuation but more confirmation is needed. In this case confirmation would be the trigger, which is the break of the support trend lines and bottoms. Hence when price is able to push through the support levels of the 4 hour chart (various blue lines), I think short trades look good. The main horizontal support level I am monitoring is the first bottom (dark blue circle) after the bearish impulse on the 4 hour chart (red arrow). Long trades do not look appealing to me unless price breaks above last week’s high (red circle here below). Please see this chart for an easier reference:

We saw great comments and analysis on the NZDUSD so we are hoping for the same performance from you this time around. Please drop in your great analysis down below! Thanks and wish you Happy Trading.

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Understanding Expectancy in Forex Trading

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Using Technical Analysis in Real Live Forex Trading

Today’s post will be focused on applying the steps of technical analysis in discretionary Forex trading. These steps have been laid out in a guide, which you can access here. For more information on trading the Forex market with less discretion, rules based, and a set and forget style, please take a look at this link.

STEP 1: SELECTING A PAIR

The Forex market offers a wide selection of currency pairs to choose from. Actually picking one of them is not always as an easy task. For today’s article I thought about analyzing plus discussing this week’s (after Monday’s price action) Aussie and Kiwi weakness, GBP slight rebound so far, and the CAD weakness. When scanning through the individual charts I decided to focus on USDCAD because price is offering interesting decision spots on the daily time frame. The formation of interest is the triangle chart pattern (blue trend lines); the bottom and top of the triangle are the decision spots.

STEP 2: IDENTIFY TREND

The trend on the weekly chart has been up: price built consecutive higher highs and higher lows (green circles) and price recently bounced off of the bottom channel line (green). The weekly trend is currently without doubt UP (also notice that the resistance line has been broken (red)).

The trend on the daily chart is also UP: price is moving up in an uptrend channel and it is above the 50 ema close as well (magenta). Furthermore price respected the 50 Fibonacci retracement level and its first target at the 27.2, which is a typical trending characteristic.

With the weekly and daily chart in an uptrend Forex traders can conclude that trend traders are in search of long opportunities, reversal trades are looking for smart shorts, and range traders are probably skipping this pair.

STEP 3: IDENTIFY PATTERNS

Let’s review the candle stick and chart patterns on various time frames.

Let’s start with the weekly chart. Last week closed bearish but the candle did not break the candle high and low of 2 weeks ago. I need to be cautious of the high at 1.11 which is the high of the last 2 weeks. No chart patterns.

The daily chart shows a pinbar formation on Friday at the 78.6% Fibonacci level and support trend line (blue). It also had a strong bullish candle on Monday (with a close near the high). There was also a previous chart pattern visible: an expanding wedge (purple lines). This pattern is quite rare and price managed to break above it in the meantime, adding to the bullishness.

STEP 4: IDENTIFY SUPPORT AND RESISTANCE

When I review the daily chart I am able to see that many resistance lines have already been broken. The trend seems to be the winning the clash with support and resistance. One line can be added to the chart (purple) but this trend line only has 2 hits. The biggest resistance could be last week’s high at 1.11.

CONCLUSION:

The uptrend looks strong at the moment. Let’s take a look at what spots traders can act:

1. Reversal traders could attempt shorts at the 1.11 weekly highs


2. Reversal traders could attempt shorts at the -61.8 target at 1.12 and weekly top at 1.1270


3. Reversal traders could attempt shorts upon the 4 hour shooting star (red circle) as price can always overextend in a trend (riskier trade)


4. Range traders would look for other pairs


5. Trend traders can look for longs at any of the Fibonacci levels (green box). The best is to wait for price action confirmation signals such as candle stick patterns at the Fibs (green arrow)


6. Trend traders could trade the break of resistance (red and dark red) but this will take some time before price retraces and breaks (purple arrows)

Do you agree with the above analysis and conclusion? Do you want to add something to the above mix? Let us know!

Thanks for your comments and shares, and Happy Trading

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Price Action Trading Forex in Low Volatility Conditions

Last night I held a webinar on trading Forex in the currently low volatility conditions we are experiencing. Below you will find the webinar along with extra information.

In the last few months, Forex has fallen to a period of extremely low volatility. At the moment, volatility is going back up. However, it will be a long climb before volatility reaches mid 2013 levels again.

For me and the forum members, these conditions have been fantastic. A lot of people see low volatility as a bad thing. However, if you know how to trade in it, low volatility can be great.

Why is low volatility great?

Well, one of the biggest reasons is that there are less surprises. Low volatility markets are much more relaxed and much more predictable. You may make less pips, but who care about pips…

… As a Forex trader you don’t measure your success in pips.

If Bob is making $ 100 per pip and Time is making $ 10 per pip, Tim needs to make 10x the pips Bob has to make to equal Bobs profits. You calculate profit and risk based on a percentage of your total trading capital. Since you can have much tighter stops in low volatility conditions, you can trade more lots. So less pips will equal the same amount of money.

Low volatility has been causing issues for a lot of traders. If you look at Forex forums, or trade following services, the performance of many traders has gone downhill.

Why?

Because these traders do not know how to adapt to current market conditions.

Adapting your trading to current low volatility conditions

One of the best aspects of trading price action is that price action works in all market conditions. There will always be a few changed you need to make, but with price action those changes are minor.

The main changed I have made to my strategy in the last few months are as follows.

• I have tightened my stops and targets.


• I have tightened the space between my support and resistance areas.


• I have been adjusting my support and resistance areas weekly as opposed to monthly.

These are all the changed I had to make to adapt to current market conditions. In the video below I will show you my strategy in action. Before I do that, I want to talk a trade that a viewer of the webinar alerted me to during the webinar.

The EUR/GBP Long

After last nights webinar, a whole lot of trades triggered. This was no surprise as the massive move caused by the European interest rate news had to retrace at some point.

During the webinar, a webinar attendee spotted an awesome trade set up on EUR/GBP and asked me to check it out. This can be seen at around about the 37 minute mark on the video. Below is an image of the set-up during the webinar.

This was an awesome reversal set-up. I was in two minds about entering it as NFP was coming up the next day. However, in the end I jumped in for a quick 23 pip gain.

I ended up entering this trade in bed at around about 6:00 am my time. I waited for price to retrace to around about 0.7927. I only entered this trade because I could get a very tight 10 pip stop on it. My first target was at the blue dotted line, which was 0.7952. Since NFP was nearing I ended up closing the full position at 0.7952 instead of holding out for a second target.

So, thanks Andrea for spotting this trade in the webinar!

An important thing to note about this trade is that I did not make any changes to my normal position size. So technically, this trade was not a huge gain. What do I mean by this?

Well, let’s imagine I normally risk 0.5% of my account on a trade with a 30 pip stop and a 60 pip target. If I have a 10 pip stop and a 25 pip target, I would still risk 0.5% which means I would need to trade more lots. In this case, I did not change my lot size, so the 25 pip gain was more like a 15 pip gain when compared to an average trade. Either way, profit is profit, so I am happy with the trade.

Some of the other trades taken on the forum were EUR/USD 8hr long and USD/CAD 6hr short.

We do not normally trade this close to NFP. However, for me, it was really hard to pass up on the opportunity to make some quick profits from the retrace of yesterdays fall.

Trading Forex in Low Volatility Webinar

That was pretty much the longest written introduction I have ever done for a webinar. I hope you got through it all though, I know you are anxious to see the webinar, so here it is…

My Free Price Action Strategy

If you want to know more about my strategy and how I trade, here are a few links.

• Check out the Free Price Action Strategy section for a break down of my strategy.


• Recent webinar on candlestick analysis in my strategy.


• Recent webinar on how I place and use support and resistance areas in my strategy.


• Recent webinar on how I use support and resistance together with candlestick analysis to enter price action reversal trades.

Questions?

If you have any questions as them using the comment form below. I try to respond to every comment.

NickB’s Forex Blog

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Learn Forex price action techniques for sticking with your trades

When learning Forex, people don’t tend to learn the nitty-gritty details of trading.

Things like what happened with last weeks EUR/CAD long.

What happens when you enter a trade, and it doesn’t go in your direction? Instead, price starts ranging, getting excruciatingly close to your target, and then falling away…

…If you have been trading for a while, you know the kind of trade I am talking about. If not, take a look below.

Here are two trades we took last week in the advanced course forum.

First, is an AUD/USD short.

Great AUD/USD short trade that ended up pushing down 100 pips.

This trade hits it’s first target without much hassle. There were a point at which price slowed down a little. However, the lower lows and lower highs were consistent, and sellers had control the whole way down to the first target at 0.9400.

This trade did not manage to hit the second target by the end of the week, so some people closed it out. Others kept this trade open and if you look at you chart today, you will see this trade is now close to 100 pips in profit.

So, while it was not the perfect trade, it was profitable. The thing to note is how well sellers controlled price.

Now, let’s take a look at the next trade…

… This is the EUR/CAD long trade we took last week.

EUR/CAD trade took a long time to hit target and many traders bailed before it moved.

This one is not nearly as good looking. After my entry, things got messy. Price ranged for days, my first target was almost hit twice, before finally being hot on the third attempt. It looked like buyers simply weren’t controlling price.

A lot of people jumped out of this trade early. Some of us stuck with this trade, which as a good move, because the trade paid off in the end.

And that is what I am going to show you in the video below. I will play back this trade and explain exactly why I stayed in.

Like I said at the start of this post. When you start learning Forex, you do not learn this kind of stuff. So hopefully this video will help you understand when to stick with your trade.

Check out My Price Action Techniques for Managing Trades

My free Forex Price Action strategy. Bookmark this link because I will be updating it with lots of new content very soon.

If you enjoyed this video, or have any questions, please leave a comment below. I reply to every comment.

NickB’s Forex Blog

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3 websites that you should follow to learn how to make Forex

Forex is the market of choice for the ones who want to keep increasing their capital even during the financial crisis. Unlike the stock exchange, Forex market is able to provide investors with gains, disregarding of the trend of financial markets.

Learning to trade in Forex can be hard though. You will need the right guidance, which nowadays can be offered by online resources created by investors, which will take you step by step into this fashinating, yet complex, market.

Which websites should you follow? Here it is our choiche.

• -Investopedia

Although is not a website concentrated on Forex markets, Investopedia contains all the informations you need to become a successful trader in the foreign exchange market. Investopedia provides you with deep insights, newbie manuals, news and articles about the ongoing exchanges.

Everything you need is at hand, and doesn’t even require a membership. If you are wondering about how to start, Investopedia is definitely the place to be.

• -Babypips

Babypips is the best places for people who didn’t start yet trading. It is a website that is focused on providing meaningful guides for those who are not acquainted yet with Forex. After you will take the first steps, Babypips will keep making you improve as a trader, as the manuals offered for free don’t cover just the easy subjects, but also the intermediate and advanced ones.

Babypips is one of the most appreciated websites dedicated to Forex, and there is a reason for that: many successful investors moved their first steps from that website.

• -Forexiamo

There are not just website in english dedicated to Forex. Forexiamo, as you may guess for the name, is an italian website dedicated to foreign exchange. Just like the previous ones, Forexiamo offers full guides into the market, with technical analysis, explaination of the most common trading strategies and analysis as well of the current economic signals.

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Intraday technical levels and trading recommendations on EUR/USD for May 1, 2014

Show full picture In March, the failure of the bulls to fixate above 1.3880 applied enough bearish pressure on the pair towards the recent demand zone around 1.3700. At retesting of 1.3700, significant bullish pressure was applied pausing the recent slide off 1.3965 which led to another ascending impulse towards 1.3880. On April 11, daily candlestick came as a bearish “Doji” indicating lack of enough bullish momentum above 1.6880. This was followed by bearish engulfing daily candlesticks aiming to apply bearish pressure on price level of 1.3800 which is still offering support so far. At the same time, several bullish attempts (including Tuesday’s bullish spike) took place to step above 1.3850-1.3880. However, immediate bearish reaction is applied resulting in successive reversal daily candlesticks pushing again towards 1.3800. On the other hand, price level of 1.3800 has been providing…

via Forex analysis review:

In March, the failure of the bulls to fixate above 1.3880 applied enough bearish pressure on the pair towards the recent demand zone around 1.3700.

At retesting of 1.3700, significant bullish pressure was applied pausing the recent slide off 1.3965 which led to another ascending impulse towards 1.3880.

On April 11, daily candlestick came as a bearish “Doji” indicating lack of enough bullish momentum above 1.6880. This was followed by bearish engulfing daily candlesticks aiming to apply bearish pressure on price level of 1.3800 which is still offering support so far.

At the same time, several bullish attempts (including Tuesday’s bullish spike) took place to step above 1.3850-1.3880. However, immediate bearish reaction is applied resulting in successive reversal daily candlesticks pushing again towards 1.3800.

On the other hand, price level of 1.3800 has been providing bullish support so far. Yesterday’s daily candlestick is another bullish engulfing daily candlestick that originates off this level.

Since the EUR/USD pair broke below 1.3855, the pair has roughly been moving sideways with slight bearish tendency until the depicted uptrend line came to meet the pair roughly at 1.3700-1.3680 enhancing this price zone as significant intraday demand. This led to the recent bullish impulse above 1.3810 and 1.3855.

For the bulls, price zone of 1.3810-1.3785 remains the nearest DEMAND zone which provided a valid BUY entry previously. It corresponds to the lower limit of the ongoing consolidation range.

On the other hand, 1.3880 remains the nearest supply level for the bears. It should be watched for early exit from the current bullish position in case significant bearish momentum is expressed. . Stop loss for the bullish position should be advanced to 1.3770 to secure some profits.

The material has been provided by InstaForex Company – www.instaforex.com

For more info: Intraday technical levels and trading recommendations on EUR/USD for May 1, 2014

Forex analysis review

Intraday technical levels and trading recommendations on EUR/USD for May 1, 2014

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This is How I Feel Trading against HFTs Michael Lewis

via SMB Capital – Day Trading Blog:

You can be better tomorrow than you are today!

Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook.

Learn the skills necessary to identify and manage trades like these in our 10 week mentoring program. Click on banner below for details on next session in May 2014.

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For more info: This is How I Feel Trading against HFTs Michael Lewis

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This is How I Feel Trading against HFTs Michael Lewis

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GBP Rises After Strong UK PMI

via MarketPulse:

The pound has hit a near five-year high against the dollar after a survey suggested that UK manufacturing grew faster than expected in April.

Sterling hit $1.6921, before falling back to $1.6906, and against the euro it rose 0.1% to 1.2184 euros.

The gains came after the Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) ticked up to 57.3 from a revised 55.8 in March.

A figure above 50 indicates expansion, and economists had expected 55.4.

The PMI figure, the highest for five months, maintained the sector’s “robust start to the year”, CIPS said.

“Growth improved across the consumer, intermediate and investment goods sectors, as companies responded to rising new order inflows, new product launches and efforts to clear backlogs of work,” it added.

Rob Dobson, senior economist at Markit, said the survey suggested that manufacturers were creating jobs at a pace of about 10,000 a month at present, with employment in the sector expanding for the 12th month in a row.

via BBC

For more info: GBP Rises After Strong UK PMI

MarketPulse

GBP Rises After Strong UK PMI

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Where to Place your Buy Order on the GBP/CHF

via :

Lately, I have been discussing the GBP/CHF quite a bit during my End of Day recap.

The reason is that I really like the strong uptrend we’re seeing across multiple different looks and time frames (see article here for more info) and so I am eager to take advantage of possible continuation.

However, one of the Golden Rules in Forex Trading is NEVER chase a trade… So that means we need to continue to wait for this GBP/CHF to come to us before we buy in.

I discussed the steep trend line on the daily chart last week, but from all appearances, the GBP/CHF is not intending to correct that deep.

Fear not! There is another entry point that offers great Risk to Reward and a healthy probability that we’ll be entering in at the right place.

Remember, this is what GBP/CHF looks like on the longer time frame:

As we zoom in to see what the recent move has done, there is a great confirmation of upward potential:

What we see here is a VERY strong break after some counter trend consolidation. This has the making of a Bullish continuation leg on the longer time frame.

Better than just a confirmation point, this recent move gives us a place to enter with a high Reward and low Risk trade.

Using a simple Fibo on the breakout move, we can see where some good entry areas might be to get a better price and increase R/R:

Here, you see that recent tops and the breakout point itself correspond perfectly with our 50.0 Fib retracement level.

For me, this represents the perfect area to place a buy order because it combines strong confirmation points and a much better price than what we could get into now.

A stop below the consolidation period gives us some protection from a deeper correction or choppy movement.

By place our intended levels using the EPIC Trade Management Tool, we can determine what the potential PROFIT vs RISK will look like if we get this trade to come to us.

As you can see, I have used our custom tools to “Set Up” the trade ahead of time so I know what kind of profit potential is on the table.

In this case, if we’re able to catch the GBP/CHF as it runs toward the daily high, I have about 10,500 USD in potential profit compared to $2,600 in potential risk; so this is a trade I am happy to take.

Look forward to your thoughts below! And fingers crossed for this pair to behave!

For more info: Where to Place your Buy Order on the GBP/CHF

Where to Place your Buy Order on the GBP/CHF

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