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Learn Forex: Scalping Market Momentum December 12, 2012

By , Forex Trading Instructor
12 December 2012 21:00 GMT

Article Summary: The AUDUSD has advanced as much as 162 pips from the start of December trading. As the trend continues, short term market momentum can be used to identify fresh scalping opportunities.

Scalping the Forex market relies heavily on short term technical analysis to help identify market momentum.Ultimately this analysis will be used to give a trader a bias to buy or sell a specific currency pair. Today we will review the ongoing AUDUSD uptrend and see if there is an opportunity for future upside momentum.

The AUDUSD has been on the move since the beginning of October, and has steadily been printing higher highs. As seen below on the 4HR chart the AUDUSD has move as much as 162 pips higher for the month of December. With price now threatening to continue its move, we will turn to our Building Blocks to find the key points in short term momentum in order to find scalping opportunities.

Learn Forex – EURJPY 4Hour Trend

Learn_Forex_Scalping_Market_Momemtum_December_12_2012_body_Picture_2.png, Learn Forex: Scalping Market Momentum December 12, 2012

(Created using FXCM’s Marketscope 2.0 charts)

AUDUSD Building Blocks

Pictured below we can see the AUDUSD 30minute chart segmented into our Building Blocks. The analysis for Block 1 began on Wednesday December 5thth. Price printed our graphs low at this point which resides at 1.0440. From this low the market surged 53 pips higher, printing our Block 1 high at 10493. Since a higher low and higher high have been identified, Block 1 has been painted blue.

As seen below, both Block 1 and Block 2 are heading in the same upward direction. Building 2 created a higher low and higher high as well. The high for Block 2 stands at 105.39. This price was temporarily acting as resistance before price broke out early in today’s trading to form yet another high which stands at 1.0554.

Learn Forex – AUDUSD Building Blocks

Learn_Forex_Scalping_Market_Momemtum_December_12_2012_body_Picture_1.png, Learn Forex: Scalping Market Momentum December 12, 2012

(Created using FXCM’s Marketscope 2.0 charts)

With market momentum in both Building Blocks remaining higher, the short term trend for the AUDUSD remains upward. With momentum identified scalpers may look to buy the AUDUSD on future market advances. Alternative scenarios include a breakout under the Block 2 high, acting now as support at 105.39. A breakout below this point could potentially put the current trend in jeopardy and at least change the trading bias on the AUDUSD for the short term.

---Written by Walker England, Trading Instructor

To contact Walker, email WEngland@FXCM.com . Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to WEngland@FXCM.com .

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12 December 2012 21:00 GMT