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EUR/USD

EUR/USD

Thomas Long, Course Instructor

On this 4-hour chart I have plotted the Slow Stochastics indicator using settings of 15,5,5 to offer one way to time those sell entries.

eurusd

Indicators offer the most value when trading with the trend, as by design they can do no more than show changing momentum. We increase the chance of success by finding those situations when changing momentum has a better chance to lead to a reversal, which is where trading with the trend comes in. This 4-hour chart also shows a series of lower highs and lower lows which by definition is a downtrend. The sells would be on a crossover by the Slow Stochastics after a move to above 80. We can see how this approach would have offered a few of solid opportunities. We can also see how another trade may be setting up at the moment. Trend trading is blind faith, meaning we just have to trust that the market will move down to a new low after we sell. But the FX markets are known for their long trending moves and the most successful FX traders take advantage of this and consider it an edge. Trend traders will be wrong on a trend change, but in the meantime, one can see on this chart how finding and trading the strongest trends makes it worth the risk to assume that the trend will remain intact instead of trying to pick the end.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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