Trading Forex Support & Resistance

AUDUSD Trade 3rd March 2010

2010-03-12T11:39:00.000Z

Sorry folks, I'm a bit late getting this one online; life in general and business in particular kept getting in the way. Anywho, here's an explanation of the the last trade which pulled us a nice 100+ pips.

Please feel free to ask for any clarification you need.

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AUDUSD 16 Feb 2010 _ Trade closed

2010-02-16T21:28:00.000Z

Pleased to say the last two trades closed with a nice profit and I've opened a new one based on the retracement to the 0.9000 area. I'll let the video speak for itself as I've also covered some of my thinking on how I manage running trades to lock my profits in.
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AUDUSD 16 Feb 2010

2010-02-16T10:52:00.000Z

I've added another trade to the existing position, which has some profit locked in now. We are close to a Resistance area but I felt it was worth looking for a run up to that level with the promise of a breakout above it.

There is some Support being created after the big run up to.8957 so this may appear to be risky but I have often found this to be profitable in the past.
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Nice little winner....

2010-02-11T15:54:00.001Z

A tidy 74 pip winner on the last AUDUSD trade and only a small position but while the market is still in flux there's no point being too aggressive.

I'll be looking to see if price can climb and hold above the Daily close at 0.8868 so, for now, I'll leave the pending Buy Stop in place.

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AUDUSD Trades 9/10 Feb 2010

2010-02-10T20:28:00.001Z

Better late than never, here's an explanation of the last winning trade on this pair and an explanation of the pending orders currently in place.

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USDCAD Short 5 Feb 2010

2010-02-05T15:54:00.002Z

I won't bore you with the thinking on this one as it's all in the video.

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I forgot about this one

2010-02-04T23:49:00.000Z

I've had this in my bookmarks for a while and tripped over it tonight. It should give you a chuckle, though.

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EURUSD 3 Feb 2010 (Closed)

2010-02-04T12:10:00.000Z

Having seen a succession of Closes below the Potential Support line, it was time to get out and wait for NFP. This is the way I have normally controlled my exposure on long-term trades and until we have seen the way the market reacts to tomorrow's announcement it seemed sensible to pull the plug on this trade and re-focus after the dust has settled.

Historically, I've tended to ignore NFP on these types of trades and even taken small add-in ones when I feel I have an angle on where the market is heading. The key difference is that, last year, I had a clear idea of market direction and would normally be holding onto trades that had good profits already locked in. This one was different; not only was it in drawdown but there is still a negative bias on this pair and until the EEC decides on how to handle Greece's deficit, and those of the other small European nations, it might be a struggle to really discover where the market thinks the bottom has been hit.

The US economy seems to be showing signs of recovery and maybe the market feels that the appetite for risk is suffering from indigestion at the moment, but I'm certain that at some point this year the decline of the Dollar (long term) will rear its ugly head again; as always, it's the timing that's crucial.

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EURUSD 3 Feb 2010

2010-02-03T09:42:00.000Z

Having taken a break to clear my mind, I've come back to trading with fresh enthusiasm and will be relying on my old methodology.

This video should give you a clearer idea of where my strengths as a trader lie, rather than the ill-conceived scrambling around the 1-hr charts that overtook me during the Christmas period.

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Out of the game for a while...

2010-01-25T15:10:00.003Z

Sorry folks, due to personal circumstances I have to stop trading for now. I'm unable to devote the proper time to assessing trades and this is affecting my performance. I hope that some of what I've shown you is of use to you and I wish you well in the future.

EURJPY Breakout Trade

2010-01-25T11:23:00.002Z

Simple break of the 128 level taking advantage of general EUR strength.

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Trading S/R with different Brokers

2010-01-24T20:39:00.000Z

People worry too much about when their broker opens and closes for the day. In practice it doesn't make that much difference. I hope this video will help to ease any concerns you may have on this score.
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EURJPY Review

2010-01-23T11:09:00.000Z

A look at Support and Resistance levels in the EURJPY currency pair.

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EURUSD 22 Jan

2010-01-23T01:01:00.000Z

Playing a 1-hr Pinbar.

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Short-term trade on AUDUSD

2010-01-21T13:28:00.000Z

As we are hitting an area of Support on the Aussie, it seemed worthwhile trying a quick Buy trade on this pair to catch some pips off the bounce.

You can watch this on YouTube, as well.

The problem with directional bias....

2010-01-20T14:41:00.002Z

What's driving me mad is I traded brilliantly at Support during the uptrend but haven't been able to bring myself to go short at Resistance during this downtrend. Yet when I look at my levels, both current and historical, I know how accurate those levels are and can see time after time how price works its way up and down from them.

Maybe I had TOO good a run going long and my old brain isn't agile enough to cope with the reversal. The other stupid thing is that I teach everyone to sell at Resistance and buy at Support, but be prepared for price to blow through these levels (that's what stops are for) but have found it hard to commit to contrarian trades.

EURUSD Short

2010-01-20T13:27:00.000Z

This has been a major shift in mental approach for me. One problem in being a trend trader is accepting when your bias has to change and realising that it's time to trade in the other direction.

Well, that moment has arrived for me. It may be that I've come into this downtrend too late but felt it was worth tracking this pair down to the next Support area, when I'll look to go long again (perhaps).

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AUDUSD 19 January 2010

2010-01-19T15:11:00.004Z

A straightforward buy order set above a PinBar on the 4-hr chart. The yellow support level at .09203 is set on a significant Daily close which you can check on your own charts. Different brokers may show slightly offset levels but they are all near enough to have no effect.

You can watch this as a video on YouTube as well.

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EURUSD Overview

2010-01-19T14:35:00.000Z

With Price Action as choppy as it is, it's worth taking some time out to really look at the chart and formulate a game plan for the next few days. This video should give you some insight into what I will be watching for when trying to find clues as to what the market wants to do with this pair.

Handling losers as a trader....

2010-01-19T11:09:00.003Z

I have to say this has been one of the more difficult periods I've had as a trader. As a trend trader I'm used to picking my trades and then simply deciding on whether to hold or close at various S/R levels.

Most of last year (2009) was easy, in terms of assessing the charts; I could pick my entry points, stop and take profit levels and walk away from the chart. If I hadn't set a profit level I found very little trouble in choosing whether to hold and add-in or close and wait for a new signal.

The market, at the moment, has me confused. Nearly every trade I'm making results in a short move into profit but without enough momentum to take price to a level that would justify getting to break even. If all these trades just blew out immediately I could at least stand back and know that I was simply making bad calls.

It's not unusual, when you are going through a period like this, to wonder if it's all worth the hassle. The consolation is that I know the last time I felt this way was also during the same period, ie Christmas/New Year. Coupled with a move to the shorter-term charts, it's clear that I've changed my trading style and am paying the price. The saving grace is that I've kept my exposure low on these trades, so I've limited the overall damage to the account and I know that it will only take a few good trades to get me back where I was before this holiday period.

Today's trade EURUSD long

2010-01-18T20:28:00.000Z

I've taken this trade based on a series of Inside Bars (IB) on the Daily and 4-hr charts.

Start of a New Year....

2010-01-09T14:00:00.006Z

Welcome to 2010, let's hope the financial world gets itself back in some sort of order and we can move on to better times. (Well, sometimes it's better to travel in hope than arrive.)

When I look back over the last few weeks, I remind myself of just why I hate trading during the run up to Christmas and the New Year. Even in normal times the market doesn't always follow a consistent pattern and although there are always opportunities to make money whatever the market is doing I do find it hard to get a handle on things.

While all the talk was of Dollar strength, a quick look at the charts shows some inconsistency in the level of sentiment.

For example, here's the AUDUSD since mid-December. Does that show Dollar strength? I appreciate that the difference in each Nation's Interest Rates offers an element of carry-trade incentive for holding Australian Dollars, but true US$ strength would offset this to some extent and I would expect to see this pair trading in a range more like the EURUSD as shown below.

Here's another of the EURUSD; same thing. The Euro is stuck in a range, admittedly, but after the drop to mid-December you would hardly say we have much in the way of Dollar strength showing here.

I must be honest and say I missed several opportunities on the Aussie as I started to look for buying signals on the Euro and, as I prefer to trade only one pair at a time, found myself locked into Euro trades when there were better things on offer on the Aussie. C'est la vie!

Hopefully you can see how the Support levels on both these pairs have proven to be respected and although the Euro hasn't yet broken out of its range, if price can hold above the 1.4300 - 1.4350 area then I would expect the uptrend to be resumed.

Mentoring Program....

2009-12-10T21:06:00.004Z

As a result of several requests I have decided to offer a basic mentoring service designed to help you understand the basics of Support and Resistance and how to set up the charts.

I cannot offer a signal service as my style of trading is very discretionary but what I hope to do is set you on the road to a profitable future by teaching the most fundamental of all trading strategies.

As I use a combination of Skype and a screen sharing program there are no additional telephone costs involved for you during each lesson.

The course will involve initially 5 x 1-hour sessions over a period of one week. The time of each of these sessions will be set to suit your schedule but I would prefer that they take place in the evening (GMT) as that coincides with the quietest time in the market. However, you are free to choose the time that suits you best.

I realise that for many of you this may not be sufficient time to fully understand the important lessons that I teach and I am prepared to offer a maximum of three free follow-up lessons to answer any questions you may have. Should you require further help then you may choose to sign up for a second course at the same price.

The details of the course's structure are contained in a PDF and I am happy to answer any of your questions before you commit to any payments. If you would like to see this overview then please email me. You will find my email address in my profile.

I will not be offering group sessions at this time as I prefer working one-on-one with each student as this gives me the best opportunity of uninterrupted tuition, to each student's benefit.

Trading Trends inside Ranges

2009-10-04T21:20:00.019+01:00

I mentioned about looking for trends in the previous post and I want to touch on that in this one. There are long-term trends and med- to short-term trends. Which of these you trade is a personal decision but I am convinced that unless you have taken a firm stance on where the market is moving, relative to the trade you're considering at this moment, the greater the likelihood that you may fail. My approach is quite simple; if I see the long- to medium-term charts in a pair are pointing up, I tend only to trade Long; if I see, in a different pair, the same type of charts pointing down, I tend only to trade Short. This way I feel I'm always swimming with the tide. Occasionally I will trade against the major trend but only if I can determine a reasonably defined range that offers the appearance of a strong move down to Support or up to Resistance.

The importance of choosing when to go Long and when to go Short - knowing if price is moving up to Resistance or down to Support - is key to survival. Many of you will trade your short -term charts with only a cursory look at, maybe, the next higher time frame (TF) or two. Even if you think that scalping is the way to go (and I don't), a proper understanding of how to apply S/R in higher TFs will benefit your current methods. Often, you will be in and out in seconds, maybe minutes, as you try and keep one step ahead of the market. How much easier your life would be if you knew you were taking a Sell signal as price was bouncing off Resistance in an overall downtrend.

Marking S/R isn't that hard; it just takes a bit of screen time and selectivity. The rewards are huge; I can promise you that once you have developed a feel for it, you will be able to mark up any chart in a matter of minutes. Here's a shortish video that will show you that looking back into the history of a chart can provide very strong clues as to where and when price might react at a certain point.

The one thing to be aware of is this: no Support/Resistance area, no Moving Average, no Trend line, no Fib level, no Oscillator nor any other indicator is infallible. They only show the Potential to provide you with a trade opportunity; at times of real stress in the market, price will blow straight through whatever lines you've marked on your chart. Even having said that it is amazing how the steepest fall in price will find a Support level somewhere; it just depends whether you are still in business to take advantage of it.

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Unfortunately, this video was too long to fit on YouTube but I hope it will show how history repeats itself, despite what you may hear to the contrary.

What else is important, apart from Support & Resistance?

2009-09-27T19:48:00.000+01:00

Another factor that comes into the trading equation is whether the pair or instrument you are looking at is in a trending phase or a consolidation phase. You will see various percentages spoken about this; some say that currencies will trend only 30% of the time so we'll stick with that. The actual numbers are irrelevant for S/R traders, because our aim is to make money whatever the chart is doing.

In fact, it is the ability to survive and make a profit during periods of consolidation that determines whether you will last as a trader, long term. New traders who do not understand the concept of S/R are, as a rule, entering Long (Buying) when price is just about to meet Resistance or going Short (Selling) when price is just about to meet Support. With the tight 10-15 pip stops that most use, it's no wonder that the continuous, rapid up-and-down movement typically seen at these significant points on any chart quickly eats away at their accounts.

Support & Resistance (S/R), on its own, can be a viable way of trading but the decision to go Long or Short becomes much easier when you have found a solid way to identify the dominant trend.

Every chart has a trend that should be obvious but I have noticed a tendency for new traders to focus too much on the immediate price action, typically on 5- or 10-minute charts, without the benefit of zooming out to see the big picture. For them, every Green candle/bar is an invitation to go Long and, conversely, every Red candle/bar is an invitation to go Short. Zooming out will give you at least the chance to spot whether you are trading against the dominant trend on your chart or with it.

In my experience, trades with the trend have a greater chance of success and the potential for a greater pip count. If I do trade against the trend then my profit targets are much closer and my stops closer. As a rule, I am a trend trader and rarely take trades which are trying to swim against the tide.

So, what is Support and Resistance?

2009-09-26T18:24:00.000+01:00

When you are looking at a chart, Support and Resistance is simply a visual representation of Demand (Support) and Supply (Resistance).

In simple terms we can say that when there are more traders ready to buy an instrument (Long) than there are traders ready to sell (Short) we have an excess of Demand. When your chart registers a change in direction from down to up this is the point where that excess Demand creates the Support area.

Conversely, when price reaches a point where there are no more traders interested in buying we reach a situation where there is an over-supply in that instrument and price will start to fall. This excess of Supply creates the Resistance area.

At every stage of a move plotted on a chart you have traders all round the world trying to establish at what point price represents fair value. When the majority of the largest traders have reached a point where they reckon this has arrived you get one of the many periods of consolidation so common in any arena of trading.

Trading Support & Resistance

2009-09-13T15:52:00.001+01:00

Welcome to my little corner of the BloggerSphere!

If you are interested in how to trade Forex (or other types of instruments) then maybe I can help.

Please don't ask me whether using a Moving Average, MACD or any other indicator will improve my results as I won't reply. I don't like them and it's a long time since I relied on them to tell me when to trade.

Nor will I offer trading signals. All I hope to do is educate you on the value of using Support and Resistance in your day-to-day activities. If you feel that adding additional indicators to your screen will help you, go ahead. All I will say is that you don't need them.

OK, let's get to it.