Tuesday, March 3, 2015
My Trading View: GBP/USD
The GBP/USD has be heavily bearish since Mid July 2014. There was a reject test of the 1.50 level in January and now it may look like there is a change of sentiment. I am predicting this the pair will break the 1.55 level and retest, if this happens we will be look at a bullish GBP/USD! eventually. I believe this is even more likely to happen as Sterling is looking stronger across the board. A have a screenshot of the pair below, I am looking for a retest at 1.55 and going to go long with a low test/double bottom/doji.
Monday, March 2, 2015
Forex Basics: How to Read a Chart cont.
Trend Lines
A trend line is drawn, on a bullish market, along the bottom of the trend to indicate when the price is going to bounce so you know when to enter a trade. Trend lines are probably one of the most influential indicators out there, and probably the most underutilized. All you have to do to draw a trend line is to locate either a major top or bottom and connect them going through as many bars as possible. A general rule of thumb is that it has to be touching at least three candles for it the be valid. The example below is from the massive bearish move from the GBP/USD throughout 2014. Ignore the horizontal lines.
Key Support and Resistance
Key Support and resistance is by far my favorite 'indicator'. They can either be drawn against historic prices or recent swing highs/lows.
In the diagram above you can see resistance is drawn on the swing highs and support is drawn on the swing lows. These levels can be vital in knowing when the price is going to set up for another run.
In a bullish market, resistance becomes support, in a bearish market support becomes resistance.
Exponential Moving Averages
50 and 200 EMAs are the most popular of the lot. A line traces along with the price to give an average price over either 50 bars or 200 bars. This gives us a good idea where price is heading. You should rarely trade into a EMA.
If you have any questions regarding this lesson or anything about Forex I'll be happy to help. Please comment below.
Sunday, March 1, 2015
Forex Basics - How to Read a Chart
To many of you looking a any kind of chart, whether it be Forex or Stocks, is like trying to read Mandarin. Hopefully after reading this you should be somewhat relieved that it's actually not complicated at all!
Firstly we are going to take a look a close look at a candlestick on a up day:
On most charting software, green is up, and red is down.
1. Open - this is the price at which this particular currency pair closed the day before, therefore what price it opened for that day.
2. Close - this is the price which this particular currency pair closed at for the day, and which will be the price trading will start at for the next day.
3. High - this is the highest price which this particular currency pair reached for that day
4. Low - this is the lowest price which this particular currency pair reached for that day
The currency market is open 24/5, you may think that a new bar is made at midnight but you'd be wrong. A new bar is made for the next day at 10:00pm. So the market opens for the week on Sunday 10:00pm and runs right the way through to Friday 10:00pm make a new bar every night at of course, at 10:00pm. Easy. (I am always referring to the daily chart, there are many other time frames)
The most basic thing a new trader will learn is to: BUY LOW, SELL HIGH
This sounds extremely simple, although the trick is to work out where the low and the highs are.
The above is an example of this theory. Now this would be the perfect year of trading if you caught all of these trades. Nobody can predict the market like this, so catching these moves are extremely unlikely especially if you are a conservative trader. Although, even if you caught 3-5 of these trades on one currency pair, you're going to be extremely well off!
A trend is when a currency pair is predominantly going in one direction. A trend consists of Runs and Pullbacks:
Green is the run, and red is the pullback. To make money in a down trending market you have to sell at the top of a run and and buy at the bottom, and vice versa for a up trending market.
Always trade with the market, never against it. This means never buy in a down trending market as you will get smashed when the run starts again.
I will continue this lesson in my next post. Make sure to add me to your circles so you don't miss any information.
If you have any questions, post them in the comments and I will happily answer!
Firstly we are going to take a look a close look at a candlestick on a up day:
On most charting software, green is up, and red is down.
1. Open - this is the price at which this particular currency pair closed the day before, therefore what price it opened for that day.
2. Close - this is the price which this particular currency pair closed at for the day, and which will be the price trading will start at for the next day.
3. High - this is the highest price which this particular currency pair reached for that day
4. Low - this is the lowest price which this particular currency pair reached for that day
The currency market is open 24/5, you may think that a new bar is made at midnight but you'd be wrong. A new bar is made for the next day at 10:00pm. So the market opens for the week on Sunday 10:00pm and runs right the way through to Friday 10:00pm make a new bar every night at of course, at 10:00pm. Easy. (I am always referring to the daily chart, there are many other time frames)
The most basic thing a new trader will learn is to: BUY LOW, SELL HIGH
This sounds extremely simple, although the trick is to work out where the low and the highs are.
The above is an example of this theory. Now this would be the perfect year of trading if you caught all of these trades. Nobody can predict the market like this, so catching these moves are extremely unlikely especially if you are a conservative trader. Although, even if you caught 3-5 of these trades on one currency pair, you're going to be extremely well off!
A trend is when a currency pair is predominantly going in one direction. A trend consists of Runs and Pullbacks:
Always trade with the market, never against it. This means never buy in a down trending market as you will get smashed when the run starts again.
I will continue this lesson in my next post. Make sure to add me to your circles so you don't miss any information.
If you have any questions, post them in the comments and I will happily answer!
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