Good Contents Are Everywhere, But Here, We Deliver The Best of The Best.Please Hold on!
Your address will show here +12 34 56 78
FX_24_Hours_per_day_body_x0000_i1025[1]

If you are serious about forex trading, then you should go through this article very carefully as we are going to discuss a very important, often overlooked, point pertaining to trading. As you know the charts are the basis for any kind of technical analysis in the forex trading, so even a minor flaw in the information offered by the charts could ruin the entire analysis.

There are some brokers whose charts offer six daily candles per week (the sixth one is an unnecessary 5-hour Sunday candle) instead of the standard charts comprising of 5 daily candles a week (based on the New York closing). For example, look at the following EUR/USD chart; the sixth candle (Sunday bar) is highlighted by an arrow.

sunday

The sixth (Sunday) candle could have a major impact on the formation of the Monday candle. For instance, have a look at the following NZD/USD chart;

nz c

You can clearly observe that due to the unnecessary Sunday candle, the 6-day chart could not generate the bearish pin bar reversal candle unlike the New York close based 5-day chart. This is the reason why seasoned traders always use and recommend the New York 5-Day Forex Charts.

We all know that the naked price movement and formation of candles are the basis for price action trading which is believed to be the most successful and widely used trading mechanism, so it becomes very crucial to have access to the accurate and reliable data. In addition to the candlestick pattern, the 6-day chart can also cause miscalculation of Fibonacci levels, moving averages or swing levels. The non-standard chart can prove even more disastrous if a trader makes use of scalping, hedging or some other high risk strategies because the loss, due to inaccurate analysis, will be far higher as compared to the intraday or small scale trading.

Many traders and institutions nowadays are automating their trading strategies. Keeping in view the recent advancement in technology, it is believed that after 5-10 years a pretty high percentage of the forex transactions will be executed by the robots. Charts are the primary source of information for robots and Expert Advisors (EAs), hence the undesirable consequences or losses due to the usage of 6-day nonstandard charts may be even higher in the automated trading because the robots don’t have ability to analyze or think; they just implement the predefined strategies.

Unfortunately there is no way to transform the 6-day chart to the standard 5-day chart so you will need to join a broker which offers 5-day New York close charts. There are only a few brokers in the forex industry that offer the standard charting package based on the New York close, so while opening a trading account it is always recommended to make sure that the broker offers the desirable charts besides some other features such as exact execution, minimum slippage, low spreads, reasonable leverage, low commissions and all the major assets for trading.

329

Forex_Trading_361

Day trading is believed to be the best trading style to generate quick profits through forex trading. Traders use a number of day trading strategies to make money, here in this article we are going to discuss the mother of all such strategies which may also be referred as the Holy Grail of Day Trading Strategies. This strategy is basically a combination of different price action tools that include candlestick pattern, horizontal support/resistance, Fibonacci levels and trendlines.

3 Steps

The strategy comprises of the following steps;

  • Identification of Trend with the help of Swing Analysis
  • Horizontal Support/Resistance Area
  • Valid Reversal Candles

Let’s discuss each one by one.

Swing Analysis

The first step is to identify the trend. Swing analysis is the best price action method to determine the current price trend.

Price of an asset moves in the form of waves. The highest level in any wave is called the “Swing High” of the wave while the lowest level of any wave is termed as the “Swing Low” of the wave.

The ongoing trend would be considered bullish if the price printed a Higher High and Higher Low in the precious wave as demonstrated in the following EURUSD chart.

1

Similarly, if the price printed a Lower Low and Lower High in the previous wave then the trend would be called bearish. Remember this is the most crucial step of the strategy, if the trend is bullish then only long (buy) trade opportunities will be considered and vice versa. More details about swing analysis may be found in this course.

Horizontal Support/Resistance

Once the trend has been identified, now the next step is to find out major support and resistance levels. This can be done through horizontal S/R analysis. Horizontal support/resistance levels are the points that changed the price direction somewhere in the past. For instance, consider the following chart; you can observe that the USDCHF price faced rejection near horizontal resistance as marked by the red lines. If the price approaches this resistance again in future, then the area will again act as horizontal resistance level.

2

Horizontal S/R analysis is considered one of the best price action methods to calculate support and resistance levels.

Reversal Candle

Once the trend has been identified, then the next step is to find out potential trading opportunities. Reversal candles such as pin bars, engulfing candles, dojis and shooting stars etc. provide good trading opportunities by signaling a change or continuity in the ongoing trend. Price action traders tend to enter a buy trade every time a bullish reversal candle i.e. bullish engulfing bar, bullish pin bar or hammer is emerged near key support area within bullish trend and vice versa.

Conclusion

The strategy explained above is believed to be one of the best day trading price action strategies because of its effectiveness. The strategy may be made more effective by using good risk/reward ratios. If you are still confused or have any question about this trading strategy then we suggest going through the financial trading course by Shaw Academy.

25

T Analysis

GBPUSD is under the influence of oil prices, US labor market data, retail sales and consumer sentiment. The support rests at 1.29480 with resistance at 1.29680 with both lines are below the weekly pivot point at 1.31520. The EMA of 10 is falling down sharply and it is located below the EMA of 100. The RSI is moving in oversold area, the MACD indicator is in negative territory showing the price decline and the Stochastic is moving horizontally in negative area. The price decline will continue until it reaches the 1.27 area.

4

T Analysis

As the chance of rate’s hike increases, EUR is being supported. The support rests at 1.11540 with resistance at 1.11900 which both lines are above the weekly pivot point at 1.11210. The EMA of 10 is moving with bullish bias and has passed the EMA of 100. The RSI is moving above the 50 level, the Stochastic is showing downward momentum and the MACD indicator is in positive territory showing the price growth. If the pair reaches 1:12 area, it will grow to higher levels, at the moment sell positions are recommended with the target at 1.1050.

2

T Analysis

USDJPY is chiefly under the influence of the US economic reports such as Continuing Claims ,Import Price Index (M/M), Import Price Index (Y/Y) and Initial Jobless Claims. The support rests at 100.990 with resistance at 101.690 which both lines are below the monthly pivot point at 103.160. The EMA of 10 is moving with bearish bias and it is located below the EMA of 100. The RSI is below the 50 level, the Stochastic is showing upward momentum and the MACD indicator is in neutral area. If the pair goes upward it will reach 102 area however from downside it may fall towards 101 area.

2