Posted by forex at 7:41 AM
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1. Use a live Forex chart online service to plot your currencies before trading. These charts are generally free and they provide live currency quotes to the minute. Choose your currency name and the pricing frequency desired. For example for minute by minute prices on the dollar and euro pairing; use USDEURO and choose the minute frequency. You can also choose one currency only. The bar chart will be plotted with a vertical axis (for frequency) and a horizontal axis (for prices).
2.
Find the currency "Support" level on the live Forex chart. To do this, find the lowest price on the bar graph that the currency has dropped to over several times. This price is generally a buy signal for traders. This is interpreted as the currency support level; in technical analysis the currency is not expected to fall below this price for the near term. This is also a signal that there are more buyers than sellers in the market for the currency.
3. Look for the currency or the currency pair "Resistance" level on the live bar chart. Look for the highest price the currency has traded over several time. This point in technical analysis is a sell signal because it is assumed that there are more sellers than buyers.
4.
Learn to recognize currency trading patterns on the bar charts. Use various historical Forex charts to study and spot price patterns. Historical prices can be obtained for any day in the past. Compare a few of these bar charts and identify uniformity in the currency support and resistance levels. The more you practice this, the easier patterns recognition becomes.
5. Remember that currency prices are not always predictable, expect breakaway points. These are the points when the currency breaks from the previous support or resistance levels to form new patterns. When the currency leaves an old price bottom or top and moves to a new point not returning to the old price, it is likely setting a new trading level.