Have you heard of Fibonacci, pivot points, multiple time frame analysis, moving averages, MACD and RSI?
Good for you!
Have you got a way to bring them together to create something? To create a strategy that you can use time and time again without guess work, gut and hearsay? Not so many people putting their hands up now are there.
So for the few that have a strategy combining these factors you are dismissed if you so wish to be, for the rest I would like to show you how I bring these together in my own trading to offer up potential trades. Please note, this is by no means a full strategy post, I am just showing you how to combine some factors together to increase the probability for successful trading outcomes.
The example I will use is on GBPCAD since it is valid and current. Below is a 15 minute chart with MACD, RSI and some moving averages. Not a great deal to be seen here really. What I can see is a down trend and that’s about it.
I now wish to add pivot points to this same chart and time frame (below). Notice the blue line now comes into view. This blue line is the daily pivot point. Note its close proximity to price and also it coincides with the old lows.
Next, I will add a Fibonacci retracement to this chart drawn from the most recent high to the low (chart below). Notice how the pivot point is now in line with the 50% fib level and the old lows? I am starting to see a confluence of events at this same price point. Now, at this point many would say “time to trade” or “raise an order” well in my mind I am certainly thinking along these lines however I still need more information before I risk my hard earned money on this trade. Let me add some higher time frames to see if I have agreement with the major trend.
Firstly I add the 60 minute chart (below). I am looking here to see what other factors I can see that stack probability in my favour. I can see a nice down trend and that price is back into the 10 and 20 period moving averages which I consider to be the sell zone. Again this adds 2 more ticks to my list and builds the probability. Next I want to check the 2 hour chart.
Finally I want to do a final check before I raise an order. I will check the daily chart to see if there is a down trend and if there is any support in the way of my target. As you can see (below) there is a lovely down trend and nothing in the way of price moving to new lows.
So from a breakdown of a few simple technical analysis tools I have created a good looking trading opportunity. I hope I have been able to illustrate that it’s not about knowing about Fibonacci, pivot points, trend and other various technical tools but how to use them that counts. I see people talking about individual analysis tools often but when it comes to using them to create a trading decision they don’t know where to start. I hope this breakdown helps you to understand what a trader can use to come to a decision because at the end of the day if we can’t be decisive we can’t be traders.