Forex Charting Tutorials

We want to buy where the market is buying on any currency pair. How do we know where this buying interest is sitting?

Let’s look at the hourly chart for eur/aud. I love this pair, she gives me lots of pips.

Zoom in with your mouse to see the full size chart. Look at each candle where it opened and where it closed. This hourly chart from October 16th, shows us buying interest was sitting at the double fib and the aqua colored 100 sma around the 1.9820/30 area where you can see price respecting the 100 sma and the double fib, until it got broken to the downside. It traded sideways for about 17 hourly candles before building enough momentum to breakout to the downside. During those 17 hours or so a buy order sitting just above that 100 sma was good for 50 to 100 pips each time the price got rejected at this cluster support.

Note that it took over 15 attempts to break said cluster support. This is a tradeable pattern on any pair. When you have a large sma or ema sitting on 2 fibs, there is going to be buying interest there also. In an extremely volatile market, like we have seen this month so far, and are likely to see for a while yet, dont try to capture every pip of a move in the price. Set your limit order to buy it just above the support, and set your stop loss at a reasonably safe distance below it. Target your TP toward what the market has been giving for your particular pair. In this pair, a 75 pip gain was pretty much a no brainer. Or a 50 pip target was even safer. If the order hit 15 times @ 50 pips each, then you made 750 pips profit on one pair in 15 hours time.

We had a breakout of that 100 sma and double fib, Now watch and see that breakout retrace and retest the support turned resistance.Notice how my buy order sitting at the yellow 50% fib got activated and is targeting the cluster support now turned resistance. as of the time of this writing, it +121 pips with a +10 pip stop loss. No risk. No brainer.

P.S. I closed that trade when the 1 candle mom on the 15 min chart showed a retrace was coming. Entry @ 1.9416 and took profit at 1.9631 for a nice +215 pips gain. i was away from the pc all day teaching, and came home to nice surprise….

EASY MONEY….

Hello,

Excellent chart presentation.Some questions please.

What charting software do you use and where to get mom indicators?

I just started learning and don’t understand how weekly/monthly trend can have an impact on short time frame such as 15 mi ,30 mi and or 60 mi. If you would clarify please.

I thought that Daily chart is the one to check before taking short TF trades. I guess I was wrong, but that is what i keep on reading.

So can I place an order directly from a weekly chart and where to place a stop loss and take profit? That would have to be a huge stop loss, wouldn’t?

If I place an order from a daily chart is it to close to place an order according to most current daily candle, or move back several daily candles and where to place SL and TP?

Thanks in advance. I will be back read your response here.

Answer:

My broker uses the metatrader4 platform. I drag and drop the default mom from the custom indicator list on the navigator icon of the mt4. I change the value from the default 14 to 10, 5, and 1. I change the color of each mom in order to distinguish between them. You can set all 4 moms in one indicator window, or you can use a separate indicator window for each mom. I save space on my chart by combining 2 moms in one window. This gives me crossovers between the shorter timeframe mom and the longer timeframe mom.

I always begin my chart analysis on any currency pair with the monthly and weekly charts. This filters out the choppy price action, and gives clear targets to aim for. I look for levels where the price was rejected previously, and will most likely be rejected (bounce) again the next time it touches.

You can use any time frame. I am a long term investor and a short term trader. I use the monthly and weekly for my long term forex investing. I use the daily and 4 hour for my short term trading. When establishing a position, i use a small lot size as a tester position. I add to it later when it goes into profit.

Trading the short times like the 15 minute chart is too risky. It has too many swings. It is trading with casino odds. It is gambling, not investing.

I use a break even stop loss as soon as is practical. I then trail the stop loss with the price to secure my gains.

Gabriel asked:
Hi again,
Still studying the momentums and am wondering how you put the mom’s together below. Could you please direct me to a download site for MT4. Greatly appreciate your work here.
Happy trading my friend.

Answer:

My broker uses the MT4 platform. It has a navigator icon which contains a list of indicators and custom indicators. I use the default momentum indicator from the custom indicator list on this navigator.

I drag and drop it into my chart, which opens a separate indicator window for the mom. I dont want 4 separate mom windows, which would take up too much space. So i drag and drop a 2nd mom into the window of the 1st mom. Then i change the value to 10 and change the color, so i can easily distinguish between the 2.

I drag a new mom into the main chart to open a second mom window, then change the colors and the values to 1 and 5.

I’m trying to get a better feel for this momentum stuff (which is powerful stuff) and am wondering what time is best for opening / closing readings.

Thanks for taking the time.

Gabe

Ng submitted the following question:

Hi! I’ve enjoy reading your charts and analysis.Thanks for your great works. It helps me a lot as I am a beginner and still learning how to see and analysis the chart. I have some questions, here it is, how can i know that when or how to enter a trade? What I meant is i can see the trend and support/resistant zone etc, but I don’t have so called a “system” or “indicator” to tell me when to enter and how to manage the trade, SL/TP?. Hope u can guide me. Thanks in advance.

Basically, you want to look for retraces of a strong trend that will bounce and resume the trend, to place your limit orders. Draw fibs of the current trend from highs and lows. Retraces will target fibs and sma’s and trendlines. Be patient and wait for your price to be hit. The trend will eventually resume in most cases.

Your best indicators are candlestick formations. Google is your best friend. Use it to learn to recognize reversal patterns in candlestick formations.

Learn to monitor the Momentum indicator. The slope and direction will signal where the market wants to go. I use 4 momentum indicators, each one displaying a different value. The 14 candle mom shows the average price for the previous 14 candles. This gives us the trend.

The 1 candle mom gives us the retraces at the open of a candle on any timeframe. For instance, study the relationship of the price to the 1 candle mom on the 15 min chart, the 30 minute chart, and the hourly chart. You will see that the 1 candle mom is valuable as a leading indicator for price movement.

When you see agreement (same direction) of the 1 candle mom on multiple timeframes, then you know that the move is a strong one. Get your direction from the longer time frames first. Then switch to the shorter time frames to fine tune your entries. However it is less risky to place limit orders at strategic levels and let the market eventually come to your price.

If you need further clarification on anything posted here, contact me.

P.S. Your stop losses are initially placed outside the next target. Your tp is placed just before the next target in the opposite direction.