Posted by forex at 4:33 AM
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Spotting Runaway Forex Moves
1. Log on to a free charting service, such as FreeStockCharts.com. Press the 'New Chart' tab twice and two price charts will pop up on your screen. Designate one as your quotes chart and input all the symbols for the FOREX currency pairs on it. The other price chart will be your price chart that will display the price action for the currency pairs on your quotes chart. Link the two charts by pressing the upper right-hand corner link, which when you scroll down the quotes chart, the price action for the currency pairs will appear one-by-one on the price chart.
2. Click the Indicator tab on your price chart and select the 'Trading Volume' indicator, which will appear on the bottom of the price chart. This indicator will reveal buying or selling volume for the currency pair on the price chart. This will help you gauge demand for the FOREX currency pair and time your entries.
3. Scan through the different currency pairs and take note of any upward trend where price action appears at the bottom left-hand screen of your price chart and travels in the direction of the upper right-hand screen. Mark down any currency pairs that have this type of price action. This will be your high-probability trade list for potential entries.
4. Take note of any contracted price action where the price is trading near the top of its trading high but the price action is trading between two very tight price points. Typically, you want to see this trading range over the course of 13 price bars or higher. Also, you want to see a decline in trading volume which means that traders are not sure whether to take the currency pair higher through more buying and waiting to see what will happen themselves. Take note of the two price points wherever you see this pattern.
5. Prepare to enter the trade when price begins to trade up through the top of this price range on higher volume than the preceding volume bars before price became contracted. Place your stop at the bottom of the price range and take your profits at three times your initial risk.