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Strong Weak Analysis for Scalpers

Strong Weak Analysis for Scalpers

Walker England, Forex Trading Instructor

Talking Points:

  • Forex scalpers first must identify strong and weak currencies
  • Learn to enter Forex retracements with Camarilla pivots.
  • Trade price action breakouts using S4 and R4 Camarilla pivots.

Forex traders have a variety of options when it comes to trading. However, those traders who are looking to peruse scalping opportunities will most directly benefits from identifying the strongest and weakest currencies, while identifying inter day price action including levels of support and resistance. To help us with this task today we will be using the Strong Weak app coupled with Camarilla Pivots. Let’s begin!

Picking a Currency Pair

Scalping is all about momentum and market conditions. This means traders should be actively looking for pairs where a strong currency is pitted against a weaker one. The reason for this is to identify an active market trend in witch to participate. Below we can currently see the GBPJPY listed as a weak currency using the Strong Weak Application from the FXCM App Store. Knowing this, traders will look for opportunities to sell the pair while looking for scalping opportunities.

If you are unfamiliar with Strong Weak analysis, that is ok. You can review the app along with two of its uses through a series of videos linked below. After clicking on the link, you’ll be asked to input information into the ‘Guestbook,’ after which you’ll be met with a series of videos along with additional information regarding the Strong Weak application.

Risk Management App and Review via Brainshark

Learn Forex –Strong Weak App

Scalping A Retracement

Once a currency pair has been selected for trading, it is time to pick a strategy for trading. To help aid in this decision, traders can use Camarilla pivots to identify key technical levels for trading. Below we can see these pivots in action with key levels of resistance labeled R1-4 and support labeled S1-4.

The first methodology of trading pivots is to look for a retracement. Retracement traders will look for pullbacks in the trend and look to enter the market near a point of support and resistance. If price is in a downtrend, such as the GBPJPY, traders will look for price to move to resistance and then enter fresh sell orders. Below we can see price action from this morning’s trading of the GBPJPY. First price moved up to resistance (R3), before momentum returned to the market and offering traders their first opportunity to enter fresh orders.

Learn Forex – GBPJPY with Camarilla Pivots

(Created using FXCM’s Marketscope 2.0 charts)

Trading a Breakout

The second methodology of trading Camarilla Pivots is by looking for a breakout. Above we can see a breakout occurring today on the GBPJPY at the S4 support pivot. S4 represents the last line of daily support for a currency and in a downtrend and can offer a distinct area to enter new sell orders. This process can be inverted for an uptrend, looking to buy a breakout above the R4 resistance pivot.

These are just two of the most popular ways to approach scalping Forex pairs with pivot points. Now that you are more familiar with this methodology, you can practice what you have learned using a demo account. You can get started by registering for a Free Forex Demo with FXCM. This way you can develop your trading skills while continuing to track the market in real time.

---Written by Walker England, Trading Instructor

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

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