By Adam Harris, Trade With Precision

There are a great many ways to capitalise on price moves in the global markets. In this article I’ll be focusing on my approach which is primarily technical analysis. I do however monitor fundamental news announcements to ensure I keep abreast of potentially disruptive news, or anything that could interrupt a healthy trend.

I have found that having a trade tool kit of range-based strategies, counter-trend strategies and trend-following strategies, hampers me as I begin to see possibilities everywhere! This can lead to paralysis by over-analysis which can best be summed up as having too many contrary signals causing a lack of clarity.

I will now share my strategy that I like to use on trending markets. I will then apply the analysis to some currencies that I am currently monitoring for trading opportunity.

We will use some, or all, of the following criteria:

  1. A healthy trend supported by higher timeframes.
  2. Price needs to be interacting with moving averages (MAs) on multiple timeframes, which are all in the correct order and aligned.
  3. Identifying small or small-medium sized candles for positive risk-to-reward entries.
  4. These candles are formed in the Buy or Sell Zone area which is the area in and around the 10 & 20 MAs.
  5. Using default-settings MACD and RSI indicators to check for trend convergence.
  6. Taking partial-profit at 1:1 and aiming ultimately for a 3:1 target.
  7. Observing important support/resistance levels - these determine profit targets.

 

I like to apply risk management across all my possible setups, some of the more important of these are listed below:

  1. I will always use a stop-loss.
  2. I will always take profits at a given point.
  3. I choose to use a resting order to enter a trade
     

US SPX 500 Daily

Technical summary

The Monthly, Weekly, and Daily charts are all in an uptrend, with clear higher-highs and higher-lows. Price is not excessively over-extended and could soon begin to retrace on the Daily timeframe back down into the Buy Zone. Both momentum indicators (RSI and MACD) are showing agreement with the current trend.

Potential trade opportunity

It is possible that price will form a small bullish candle on the Four hour timeframe for a tighter entry than that on the Daily.

I will be watching to see if price finds support at either the 2,845 or the 2,820 levels, especially if they overlap with the Buy Zone on the Daily and/or the Four Hourly charts.

Should a small bullish candle form, this would then be the opportunity I am after to join this up trend.

GBP/CAD Daily

Technical summary

The Weekly and Daily charts are all in a downtrend, with clear lower-highs, and lower-lows. Price is not excessively over-extended and could soon begin to retrace on the Daily timeframe back into the Sell Zone. Both momentum indicators are confirming that the current trends looks healthy.

Potential trade opportunity

It is possible that price could form a small bearish or rejection candle, offering favourable circumstances.

I will be watching for price to find resistance at either the 1.7320 or the 1.7200 levels, especially if the Sell-Zone on the Daily and/or the 4-Hourly charts overlaps these levels.

Should a small bearish/rejection candle form, this would define my short entry. 

GBP/CHF Daily

Technical summary

The Weekly and Daily charts are all in a strong downtrend, with clear lower-highs and lower-lows. Price is not excessively over-extended and could soon begin to retrace on the Daily timeframe back down into the Sell-Zone. Both momentum indicators are showing the current trend is healthy.

Potential trade opportunity

It is possible that price could form a small bearish or rejection candle offering favourable circumstances.

I will be watching for price to find resistance at either the 1.3000 or the 1.2950 levels, especially if they overlap with the Sell-Zone on the Daily and/or the Four Hourly charts.

Should a small bearish/rejection candle form, this will likely create a Trend Flow- style opportunity. 

It’s important to realise that not all circumstances may set up as planned, and that ultimately I will only consider the strongest setups. Additionally, my risk would be adjusted if there is any duplication in instruments, such as if I take a setup on the two GBP pairs noted above. In that scenario, it would be wise to divide or lower the allotted risk amounts to balance this out, to ensure my exposure is reduced.

 

Happy trading.