NZDUSD is looking good right now. It has just bottomed out at a strong resistance and is looking like this on the 4 hour chart:
I took a buy at this price and am looking for it to bounce back up to the previous high.
I set up a trade on a $10 no deposit account and it turned out this profit after one trade:
a 78% return...not bad.
As I am getting used to trading, I have come to realize that one of the smartest things to do is take a look at the weekly and even monthly charts first. Why? Well, its taught quite frequently to look at the charts higher up quite a bit however I don't think the message really gets through.
While I was learning from Navin at Urban Forex I would frequently hear him mention that risk/reward ratios of 4 or 5 to one are the best. And after watching a lot of his webinars it seemed to be the only thing that peaked his interest.
Then while I was looking around I noticed in a lot of trading mentors videos they frequently say the 4 to 1 trades are the best.
So i was trying to figure out how they landed on the 4 or 5 to 1 trades so much cause they don't happen that frequently, and I started to get it when I looked at the 1 week charts.
For example the same exhaustion candle on a 1 Hour chart also appears on a 1 week chart, its just the dimensions and take profit/stop loss levels are way bigger.
Take a look:
The exhaustion candle on this 1 hr chart is a total of 18 pips. Take a look at an exhaustion on a 1 week chart:
That exhaustion candle itself is 215 pips, which is almost 12 times the size of the candle on the 1 hour chart.
So getting in on these trades is much better, however the trick is that your stop loss is going to also be in the area of 215 pips vs 20 pips so knowing what you are doing is much more important here because the risk is also 12 higher than on the 1 hour chart.
The next trick is to get in when the candle is actually peaked and about to drop...this is probably the highest level of gaming in Forex charts.... that is if you can enter a sell at the best possible time. This gets into looking into the lower charts to be able to pick the best spot. If you did pick the best entry and exit on this one you would have made a return of 88 pips in one week, on one trade. If you let the trade ride out further than you could have taken more pips as well.
But the key understanding here is that knowing where the week is going to measure out at in terms of highs and lows goes a long way into making a trading decision during the week. It also puts into your mind the idea of the trend for the week and the upcoming weeks as well.
After all the support and resistance at the 1 week chart is going to have a lot more power than the support and resistance at the 15 minute chart level.
This is probably one of the key concepts to understand in forex trading...it took me a few months of trading to get it myself.
Back to the charts and the live trade... I like the weekly chart hitting the resistance level and also take a look at the 1 day chart:
It seems to be showing that it is going to bounce back up after hitting the S/R at the current price. At least it is thinking about it.
Either way I think its either going to drop to the previous low if it breaks through S/R or its going to go up to the previous high. Now I am planning entry points slightly above and below for a buy and a sell respectively on the daily charts.
Being as these trades are set out on the daily charts, they are likely going to take a week to play out.