The mechanics of a currency trade to sit on your hands

Randy BalcomBlog0 Comments

This is the mechanics of how to set up your charts to look at a potential trade. This is an example of a potential that has not been triggered.

Step 1: Look at the longer term charts (Monthly and Weekly) for trends, levels and candlesticks.

Monthly

In the above monthly chart the market is telling a story of a potential support area from 2013. This area has been tested multiple times and has held. Also this is near the end of the month and a doji is forming which indicates a potential change in trend. This is also at a dynamic zone created decades ago, which the market has reacted around multiple times.

Results: This is a “heads up” area to watch on lower time frames. This not a trade signal, only just a watch the market area.

Weekly

No level, no signal, no confirmed reversal, trend is still down. No help on the weekly chart!

Step 2: Look at the daily and 4 hour charts for a trade signal.


Daily

 

No help here either, we are at a minor support level (Hand drawn) but no confirmed reversal signal, the market looks like a typical pull back into the trend to go short.

4 Hour

Since we are at inflection point There might be a trade on the 4 hour. This is only if you have the time to watch 4 hour charts!

We have a potential long trade above the red horizontal line, but…there is a ton of resistance to the upside if you look back a couple of weeks.

What should be your thinking on this currency pair?

Monthly: Area of potential reversal, or support at a very long term support level. No way to predict what the market will do from here.

Weekly: Same as the monthly.

Daily: No signal, market looks like it will pull back and just continue short.

4 Hour: Potential long trade above the red line, but its sloppy and the risk to reward sucks.

Bottom line: This market is going to get interesting soon and if we get increased market swings, then it will become tradeable.

For now, put it in your back pocket and check in once per week

 

 

 

 

 

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