News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • $Nas notable as we still haven't yet seen a re-test of the Sept. high. the leader of the post-March rally has been the laggard of late. $QQQ messy and orderly at the same time $Nasdaq https://t.co/Xx6xQuajy7
  • Wow, did President Trump just run his fastest press conferences on record? I didn't even get in on time to see him say 'Dow at 30,000'
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 4.49% Silver: -1.67% Gold: -1.85% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Li8v4XGOpK
  • Heads Up:🇺🇸 Fed Clarida Speech due at 17:45 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-11-24
  • The 8-day range in the Nasdaq 100 ($NDX) is the narrowest from this 2020 favorite index since Nov 26, 2019 - at the same time the Dow is pushing a record above 30,000 https://t.co/WRcmSSgcq1
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.82% 🇳🇿NZD: 0.63% 🇨🇦CAD: 0.43% 🇬🇧GBP: 0.12% 🇨🇭CHF: -0.01% 🇯🇵JPY: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/ylXazhVsHJ
  • The Dow just broke 30,000 after surging more than 13% in the month-to-date Incredible to think it stood narrowly above 18,000 in March https://t.co/ok4Zxik3JD
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Wall Street: 1.65% US 500: 1.54% FTSE 100: 0.28% France 40: 0.11% Germany 30: 0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/gDciD5fqZ9
  • Heads Up:🇺🇸 Fed Williams Speech due at 17:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-11-24
  • Dow Jones eclipses 30,000 $DJI $YM_F $DIA
Sorting Out the Trend and the Entry

Sorting Out the Trend and the Entry

2012-01-16 03:30:00
Richard Krivo, Trading Instructor
Share:

Before entering any trade, my first step is to determine the direction of the trend. Trading in the direction of the trend will result in entering higher probability trades. However, the chart that you use to determine the trend will vary depending on the type of trader that you are. A shorter term trader will employ a shorter term chart while a longer term trader will use a longer term chart.

Since I am a swing to longer term trader I will use the Daily chart. A trader who is a shorter term trader, a scalper perhaps, may choose to use a one 1 hour or a 30 minute chart. (Regardless of the time frame, the process will be the same.)

Let me show you how I go about determining the direction that I intend to trade a pair by looking at this Daily chart of the EURUSD

Sorting_Out_the_Trend_and_the_Entry._body_chart_1_16_12.png, Sorting Out the Trend and the Entry

Price action is below the 200 Simple Moving Average that I have on the chart…that is my first filter. If price is below the 200 I look for shorting opportunities and if price is above the 200 I look for buying opportunities.

The next thing that I notice on this particular chart is that price action has been building lower highs and lower lows…this is on top of the fact that the price is below the 200 and it is a plus. Yet another confirmation (trading edge) that I want to be shorting this pair.

(If I were dealing with a pair in an uptrend, I would simply reverse the signals for the entry.)

Now that I have determined the direction that I want to trade the pair, I will drop down to a lower time frame chart. In this case it will be a 1 hour chart.

Sorting_Out_the_Trend_and_the_Entry._body_chart_1_16_12_2.png, Sorting Out the Trend and the Entry

Using the 1hour chart above, my entry would be based on either of two signals: CCI (Commodity Channel Index) in the red circle moving below 100 or price breaking below the previous low…support as labeled on the chart.

Of the two, the CCI entry would be the more aggressive as it would get me into the trade at an early change in momentum but it would be less likely to follow through to the downside over time.

Price breaking below support would be the more conservative entry as it would get me into the trade later but it would be more likely to follow through to the downside over time.

Bottom Line: For higher probability trading, first identify the trend on a longer time frame chart and then “fine tune” the entry on a lower time frame chart based either on the change in momentum signaled by an indicator or on a break of support by price.

--- Written by Richard Krivo, Trading Instructor

To contact Richard Krivo, e-mail instructor@dailyfx.com.

Follow him on Twitter at @RKrivoFX

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

DISCLOSURES