The Right Forex Chart
This article will discuss selecting the proper charts, and how to read them correctly, how to execute the chart effectively from what you see in the market.
Available are many kinds of charts, that come with packages, for free; nevertheless, it is recommended that you to try the Netdania chart.
On these charts, the default number of the periods is 300, and this is a good beginning point.
> An hourly chart is 12 days of the data > A 15 minute chart is 3 days of the data > A 5 minute chart is slightly more than 24 hours of the data
You, as the trader, can have multiple "layouts" or "tabs"; this allows one to move quickly between the charts or sets of charts.
First, look at the hourly chart to attempt to gain a view of the big picture. Note the significant resistance levels and support, within 2% of the day's opening rate.
Secondly, learn the 15 minute chart in detailing the following: * The prevailing trend * The current price as related to 60 period averages in simple moving * The high and low beginning at GMT 00:00 * The tops and bottoms from 3 full-day time periods.
The next step is to utilize the information 0that you've gathered so far.
Again, view and identify the big picture; this is for the intra-day trading. Looking at the hourly chart data will give the trader the big picture - it may be up, or down. It is not clear immediately if you are in the trading range. Let us take that the trend is down.
Ascertain if next on the data (which is the 15 minute chart) has confirmed the downtrend that is indicated in the big picture. The current price from the 15-minute chart should be at least below the 60 period moving averages, and this should be sloping down.
Basically, there are two trends prevailing: This is the major, and the minor, trend.
Third, ascertain the current trend (either major or minor), from the 5 minute data chart. A major trend the slop is downward; minor if the slop is upward.
After utilizing the information that you've gathered, now is the time to trade on the information.
From this point onwards, you must at least know the course of the prevailing trend, and whether it is in the point of trading (in the course of major trend or the minor trend. You should use wisely your gathered information in trading.
