How to Spot Forex Trends - Part 3 | Vantage FX
- 11 years ago
Vantage FX (www.vantagefx.co.uk) look at how to spot trends using Chart Analysis techniques.
Trend-spotting Week
Today we are examining a 4-hourly USD/JPY chart from the beginning of September, focusing on a series of lower highs. Using trend lines in conjunction with Bollinger Bands you can often get better results.
Let's start out by drawing a trend line from the high point on 11 September, and from here you've got a closing candle stick. Let it bounce up to the middle of the Bollinger Band, and if that caps - if you get a reversal candle stick - then sit with it. We can see a shooting star candle stick here, so keep your short position and then re-draw the trend line to include that significant high.
Only on 18 September do you get a close above the trend line, followed by a huge sell off. On the 19th we close above the trend line and well above the middle of the Bollinger Band, so we need to draw the trend line again.
The combination of the new trend line and the central Bollinger Band with the upper band means that you'll have stayed short Yen and long USD all the way along. All the way from 100.55 earlier this month down to 97.15 we've caught the bulk of the move.
Trend-spotting Week
Today we are examining a 4-hourly USD/JPY chart from the beginning of September, focusing on a series of lower highs. Using trend lines in conjunction with Bollinger Bands you can often get better results.
Let's start out by drawing a trend line from the high point on 11 September, and from here you've got a closing candle stick. Let it bounce up to the middle of the Bollinger Band, and if that caps - if you get a reversal candle stick - then sit with it. We can see a shooting star candle stick here, so keep your short position and then re-draw the trend line to include that significant high.
Only on 18 September do you get a close above the trend line, followed by a huge sell off. On the 19th we close above the trend line and well above the middle of the Bollinger Band, so we need to draw the trend line again.
The combination of the new trend line and the central Bollinger Band with the upper band means that you'll have stayed short Yen and long USD all the way along. All the way from 100.55 earlier this month down to 97.15 we've caught the bulk of the move.