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Forex Currency Pairs for Scalping

Forex Currency Pairs for Scalping

Walker England, Forex Trading Instructor

Article Summary: The EURCHF is often overlooked when it comes to scalping strategies. However, after advancing 454 pips this pair has been identified for day trading opportunities.

Scalpers are always on the lookout trying to find their next trading opportunity. But before any trades can be placed, a currency pair must be chosen for execution. Normally scalpers consider both the trend and momentum when selecting a pair to trade. Today we will examine one of the markets strongest pairs and identify exactly why it meets our criterion for scalping this week.

First scalpers want to find a strong trend to trade, and the EURCHF presents exactly that opportunity! Below we can see the pair on the 4Hour chart, advancing as much as 454 pips from its monthly May low at 1.2195. With the trend continually making higher highs, traders will look to buy the EURCHF. From here traders need to examine momentum to help determine precisely when to time the market.

Learn Forex –EURCHF 4HR Trend

Forex_Currency_Pairs_for_Scalping_body_Picture_2.png, Forex Currency Pairs for Scalping

(Created using FXCM’s Marketscope 2.0 charts)

EURCHF Building Blocks

A scalper’s next task is to identify if short term momentum is heading in the same direction as the trend. This step is crucial when deciding on a pair for Forex scalping. If a pair is seen diverting from its primary direction, traders will want to move towards other trading opportunities. Today we will find short term momentum by using a blocking technique on our chart. So let’s review exactly where momentum is heading for the EURCHF using a 30 minute chart.

To begin our momentum analysis we need to identify a starting point on the graph.

Traditionally this is done, by finding the previous Wednesday and Sunday and labeling on the graph. Block 1 labeled below, begins on Wednesday the 15th and runs through Sunday the 19th. During this time frame the EURCHF continued to trade with the trend, forming a higher high at 1.2549. Block 2 also displays a continuation of the current uptrend as price proceeds to create a new higher high relative to Block 1. With both blocks trending upward, they have been displayed in blue validating current market strength.

Learn Forex – EURCHF Building Blocks

Forex_Currency_Pairs_for_Scalping_body_Picture_1.png, Forex Currency Pairs for Scalping

(Created using FXCM’s Marketscope 2.0 charts)

Now that our analysis is completed, we can confirm there is potential to consider scalping the EURCHF this week. However, it is important to remember that this analysis is contingent on the pair continuing to make new highs. In the event that price reverses and breaks towards a lower low under the Block 2 low at 1.2435 our trend would at least temporarily be invalidated. At that point, we can begin our analysis again and look to trade a new currency pair for scalping.

---Written by Walker England, Trading Instructor

To contact Walker, emailinstructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list,CLICK HEREand enter in your email information

Would you like dozens of trade ideas every day with updated charts to identify major levels support and resistance on the currency pair you’re trading?

If so, click here to learn more about our Technical Analyzer on DailyFX Plus.

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

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