As most if you already know, I like to start off my analysis using the long term charts looking for cues about what each currency is likely to do. Here is how I do it.
I do my analysis based on the market swings, so I first try to identify these swing in the long term charts.
Here is a good example:
Once a market swing is identified I only take trades in the direction of the market swing.
In this case, the GBPAUD got rejected from the bottom of the range, meaning that it is likely to continue its way up until it reaches the next LT resistance level (upper blue level).
There is one slight problem though… the market has been retracing and it’s been difficult to determine when to start looking for long opportunities.
You can tackle this by looking at the short term charts.
Here is how it looks like:
So I know a few things about the GBPAUD:
- It’s in a bullish condition
- I know I should be looking for long opportunities
- I shouldnt open a long trade right now since it’s been retracing
And by looking at the short term chart, I can answer the last one:
I know I should start looking for long opportunities once the market breaks the short term resistance level (upper green level).
Having a trading plan like this one makes trading much easier.
Try it, do it with your favorite currency pairs and you’ll start to notice how you can make your trading much easier and less stressful.
Let me know what you think.
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