Last week I released a Free eBook about The SF Box, which is a very powerful concept that can change the way you see and trade the market for good.
It answers two fundamental questions about trading:
- What currency pairs to trade
- What direction to trade them
So if you haven’t, Download the Forex eBook from here, while it is still FREE. (it has been downloaded thousands of times already).
And based on the feedback you have emailed me, I know its been very helpful.
Anyway, here is a real example of how you can apply The SF Box in the GBPAUD.
Long Term Analysis
What do you think about the weekly chart?
You might say: alright, the GBPAUD is already trading above the long term resistance level, it might be a good idea to look for long opportunities.
Do you agree with this?
Well, not so fast. It’s impossible to arrive to that kind of conclusion without looking at the short term charts.
Short Term Analysis
Here is what the short term chart looks like:
In this chart you see that the weekly orange level is in between both green short term S&R levels.
Now, you know we should consider the long term support and resistance levels as zones instead of plain levels right? Ok.
Now, three things could happen when the market gets near a long term S&R level:
- The market breaks through that level
- The market gets rejected from that level
- The market stalls around that level
Ok, lets go back to the hourly chart, and I can see that right now it is not a good idea to look for a trade opportunity, because the GBPAUD is trading in between The SF Box.
So if you thought at the beginning of this post that it could be a good time to look for long opportunities, forget about it…
What you can do instead is to write down your trading plan for the GBPAUD:
You know that if the market breaks above the short term resistance level (upper green level), it is likely to continue its way up (it will break the orange resistance level on the weekly chart).
You also know that if the market breaks below the short term support level (lower green level), it is likely to continue its way down (it will get rejected from the orange resistance level on the weekly chart).
And since it is not trading in a well defined range (yet), we cant trade inside the short term range.
Now you have a complete trading plan… it tells you what you need to do based on what the market does.
Instead of guessing, you are adapting to the market condition.
Do you see the potential in this?
What did you think about the eBook? What do you think about The SF Box?
What about my plan to trade the GBPAUD?