Forex Trend Following - a Key Tool Most Traders Don't Use But Should
If you want to catch the really big trends there is a key tool for FOREX Trend following that you should use.
If you use this tool then you will have a much better chance of catching and holding the really big trends that can yield the big profits of $10,000 or more.
So here it is:
It's the weekly chart.
Most traders simply use daily charts but if you are after the big trends the weekly chart is essential.
Why?
Quite simply, because it gives you the big picture of the prevailing long term trend.
You can see the weekly charts on many free chart services
Keep in mind that the long term currency trends last months or even years, as they reflect the underlying health of the economy.
By looking at the weekly chart these trends are clear to see and you can then time your entry via the daily chart.
The best set ups for trading are when support and resistance line up on BOTH charts.
You know then that if they hold or if they are broken they are much more significant than simply points on the daily chart.
So the way to catch the really big trends is to do the following:
Look at the weekly chart for the long term trend, then time your entry on the daily chart by looking for important resistance or support.
Once this is done you need to time your entry.
Don't simply trade on breaks or holding of support or resistance.
CONFIRMATION
Once you have lined up support and resistance on both the weekly and daily chart you need to watch price momentum.
You want price momentum to either be with you on a break of support or resistance i.e. strong momentum or if you are looking for these levels to hold you want to watch for weakening price momentum.
Use these indicators
1. The stochastic
2. RSI
They are great indicators and discussed in our other articles.
If you use them to see and trade with price momentum, the odds of your trade being successful are dramatically increased.
This METHOD
Will ensure you get in on all the big trends, with the odds on your side and help you make the really big profits.
Related Tags: profits, forex, techncial analysis, bollinger bands, forex trend following, breakouts, sotchastics
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