Hey trader, how is everything?
I believe that the most important aspect of trading is how you choose the currency pairs to trade and when to trade them.
You determine what currency pairs to trade by using the long term charts, and you choose when to trade by using the short term charts.
So at the end, its a combination of the long term and the short term charts.
But there is also the possibility to see for instance, clarity in the long term charts, but you need to wait for the short term charts to clear up a bit, or wait for clearer levels, or wait for the market to break certain levels, etc.
On the other hand, when you see both timeframes in line its time to open your trades/orders. That’s our main goal, we need to trade only when the odds are on or favor, and you know when that happens right? When both timeframes are in line.
Now, I’d like to share with you a few guidelines about the way I do my analysis and how to follow it.
How to use my analysis
When ever I write something like: “I’m looking for trade opportunities in the currency pair AAABBB”, it means exactly what I’m saying, “that I’m looking for trade opportunities” but doesn’t mean that I already took a trade or recommending you to take one right there.
It means that I see clarity in the long term charts, it means that I WOULD feel comfortable taking a trade here ONLY IF I get my signal.
Now, when you see me writing about possible entry levels, I’m actually taking those trades.
This isn’t either a recommendation, just what I’m doing/trading. But you are free to follow me if you want to!
Rest asure that if I’m talking about possible entry levels, I’m actually taking those trades. I put my money where I put my mouth.
And if I’m taking those trades, you know that the odds are on our favor.
So please, next time you read my analysis, make sure you follow those guidelines. Alright?
Good, now lets take a look at some charts!
The GBPUSD is trading near an important Long Term (LT) level.
Now, when the market trades near an important level is a very tricky market condition, there is always a fierce battle between buyers and sellers trying to see which group is going to win, it’s also very volatile (this is exactly where most false breakouts occur).
Let show you how it looks on the long term charts:
So we now that the GBPUSD is trading near a LT level, and we still dont know whether the market is going to get rejected from there or break through that level.
Sure, there will be traders that will tell you it will get rejected, others will tell you it will break through that level and 50% will be right and other 50% wrong.
The reality is that no body knows what the market is likely to do.
But hey, let me tell you a little secret. You dont need to know what the market is going to do at this moment.
Here is a better idea: just wait for the market to actually tell you what it is going to do.
Woudlnt it be easier, less stressful to wait for the market to tell you what it is going to do? Than trying to guess it?
Ok, so in order to do that, we need to look at the short term charts.
Here is what the hourly chart looks like:
Ok, we might not know what the market is going to do now, but we can create a trading plan based on the levels on the short term charts.
I know that if the GBPUSD breaks above the 1.4982 level, it is more likely to continue its way up at least until it reaches its next LT resistance level. So if this happens I’m going to start looking for trade opportunities.
I also know that if the GBPUSD breaks below the 1.4642 level, it is more likely to continue its way down until it reaches its next LT support level. If this happens, I’m going to start looking for short opportunities.
And as long as the GBPUSD keeps trading in between both green levels, I’m not going to do anything.
That would be my trading plan.
The idea is to come up with a trading plan for each one of the currency pairs that you are going to be trading.
This way, the market wont catch you unguarded, and the best of all is that you know exactly what the GBPUSD needs to do to trade it.
It will help you with your discipline and to get consistent results over time.
Simple isnt it?
By the way, if you like this way to analyze/trade the market you should check my Intensive Course here.
Are you currently trading the GBPUSD?
What other currency pairs are you trading/watching?
What do you think about the way I analyze the market? Isn’t it less stressful than other methodologies?
Share your thoughts!