The chart produces three more bullish candles. One of the candles breaches through the level of resistance closing above it. The buyers may trigger a long entry right after the last candle closes.

The buyers may set their stop loss below the breakout level. To set the take-profit level, the buyers may set their take profit with 2R. It is the best thing about this trading strategy. It offers at least 2R. Sometimes the price travels even more than 2R. Let us find out how the trade goes. The price heads towards the North with good bullish momentum. Before hitting 2R, it produces a bearish inside bar.

It continues its journey towards the North and travels more than 2R. The last candle comes out as a bearish engulfing candle. It suggests that the price may get bearish now. Save my name, email, and website in this browser for the next time I comment. About Us Advertise With Us Contact Us. Forex Academy. Home Forex Education Forex Daily Topic Using Weekly High or Weekly Low in the H4 Chart Trading.

Once the trader becomes comfortable on the longer-term chart, they can now start to gradually move into shorter-term strategies. However, doing this introduces more variability into the trader's approach. The Swing-Trader approach acts as a happy medium between long-term and short-term approaches.

One of its key benefits is that it allows the trader to enjoy the benefits of both strategies, without taking on the underlying risks associated with each method. Swing traders often follow the chart throughout the day so as to take advantage of big moves in the marketplace.

Once they find a setup that matches their criteria for triggering a new position, they proceed to place a trade with an attached stop and then check back later to see how the trade is progressing. Swing traders use daily charts for determining trends or the general market direction, while the four-hour chart is used to enter trades and place positions. Finding profitability with scalping or day trading is the most difficult way of finding profitability.

There are many complex factors that a day trader or scalper has to face. One of these is that the trader finds themselves in the unenviable position of trying to force the market to make moves. In a 5-minute time frame Japanese candlestick chart, each candlestick represents 5 minutes of time. Shorter time frames show much more detail of price movement over time, but longer time frames show wider, longer-term pictures of trends and ranges in the price.

Advertisement Test your skills - trade the weekly time frame now OPEN A FREE PRACTICE ACCOUNT. The most effective, profitable, and powerful tool you can use to trade Forex is to pay attention to whether or not there is a long-term trend or range in any currency pairs or crosses, especially the major pairs; and if so, in which direction that trend is going. Then, make sure that you trade in the same direction as that trend, or trade reversals from support and resistance when there is no trend and the price is ranging.

Use a higher time frame price chart such as the weekly time frame to make these calls. While you can use a daily time frame chart for the same purpose, you should use the weekly time frame in Forex trading for this because it is easier to judge the very long-term price action at a glance there.

It is also a good idea to drill down and use at least one shorter time frame chart as well, such as the 4 hour or hourly time frames, to fine-tune your trade entries and exits to make them more precise, which also means more profitable. The reason why the weekly time frame is the best time frame for trading Forex is because historical Forex data shows that when the price is higher than it was several months ago, it is more likely to rise than fall, and vice versa when the price is lower than it was several months ago.

So, if you pull up a weekly chart, one easy trick you can do to create the best trend indicator, is count back 13 and 26 weeks from the current weekly candlestick. Is the price now higher than it was at those times? If yes, you have a long-term uptrend. If it was lower at both, you have a long-term downtrend. If the results are mixed, you have no trend. Forget all the fancy Forex indicators — this is a method which is both very simple and effective. So, there is a clear downtrend, and this week traders can look for short trades in this currency pair.

So, there is no long-term trend, and next week traders who want to trade this currency pair should look to trade reversals at support and resistance levels. In fact, using just a single time frame to trade Forex is usually a bad idea , whatever time frame you might pick.

However, using higher time frames such as the weekly price chart, can at least tell you whether there is a long-term trend and if so, in what direction. There are several reasons why trading using the weekly time frame alone is usually a bad idea:.

It is just too long-term and slow to use on its own. While you might easily hold a good trade open on a short time frame such as 5 minutes for fifty candles, if you try holding a trade open for 50 weeks, you will encounter many problems. Some Forex brokers impose a time limit on the duration of trades , forcing you to close an open trade after it has been open for typically a few weeks or months.

Few brokers advertise this fact- you have to check the small print or ask the broker directly to find out.. Usually, it is a charge and not a credit — the system is biased against the trader and is a way Forex brokers can make money quietly from long-term traders. Even if the fee is typically small, such as a quarter of a pip per day, if you hold a trade open for a long time these overnight swap fees add up and can really eat away at your profit. Professional traders always use a combination of long-term and short-term time frames.

Typically, professional traders will have three timeframe screens open for whatever they are trading showing the daily, hourly, and 5-minute time frame charts.

Multiple time frame analysis is simply looking at two or more price charts for the same Forex currency pair or cross or other instrument, at the same time. You make a multiple time frame analysis by looking first at a higher time frame and using that chart to determine whether the price is trending and if so, in what direction or ranging, and also maybe to identify clear support and resistance levels. It is a top-down analysis, because once you have that information from the higher time frame, you then use a lower time frame to trade from that analysis, which will usually get you more precise trade entries and exits which should maximize your reward to risk ratio.

There are a few good Forex trading strategies which have historically been profitable on the weekly time frame, outlined below. You can use a shorter time frame as a tool to trade these strategies more effectively. The results detailed below are from back tests conducted on sixteen major and minor Forex currency pairs over a very long period of almost 20 years, from to Thousands of samples were taken, increasing the statistical validity of the back test.

For some reason, many traders mistakenly imagine that using a long-term trading approach means that it takes that much longer to find profitability. But the opposite is actually true. By many accounts, trading using a short-term approach actually makes it a bit more difficult to find profitability since a short-term approach requires more time before the trader can develop a profitable trading strategy.

The shorter the time frame, the less information that goes into each candlestick. Variability increases with shorter term outlooks because of the limited time. Many successful scalpers and day traders use longer-term charts to plot their short-term strategies. New traders should ideally start with a long-term approach and shift to shorter-term once they master the long-term strategy.

By doing this, the trader is in a good position to make adjustments to their trade and risk management as the margin of error increases with shorter-term trades. Traders can use the weekly chart to grade trends and daily charts to enter into new positions.

Once the trader becomes comfortable on the longer-term chart, they can now start to gradually move into shorter-term strategies. However, doing this introduces more variability into the trader's approach. The Swing-Trader approach acts as a happy medium between long-term and short-term approaches. One of its key benefits is that it allows the trader to enjoy the benefits of both strategies, without taking on the underlying risks associated with each method.

Swing traders often follow the chart throughout the day so as to take advantage of big moves in the marketplace. Once they find a setup that matches their criteria for triggering a new position, they proceed to place a trade with an attached stop and then check back later to see how the trade is progressing.

Swing traders use daily charts for determining trends or the general market direction, while the four-hour chart is used to enter trades and place positions. Finding profitability with scalping or day trading is the most difficult way of finding profitability.

There are many complex factors that a day trader or scalper has to face. One of these is that the trader finds themselves in the unenviable position of trying to force the market to make moves.

The trader also has to use tighter stops since the profit potential is lower than in the case of longer-term trades. To trade with a short-term approach, it's advisable for the trader to get comfortable with long-term as well as swing-term approaches before moving to very fast time frames such as hourly, minutes and 5-minutes trades. A scalper can use an hourly chart to grade or evaluate trends and look for entry opportunities using 5-minute or minute time frames.

The trader can also use the one-minute chart, but should be very careful about the high degree of variability that's typical of the chart. This helps the trader develop a good grasp of the market and its intricacies. Pipsofx Login. Forgot Your Password? Remember Me. The user name or password provided is incorrect.

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How to Use Retracements to Analyze Waves — Part 3 13 February, You'll notice that a currency pair rarely goes up and down if you take a look at any given forex chart. Why You Should Use the Weekly Time Frame in Forex Trading How to Measure Trend with the Weekly Time Frame Should You Use Only One Time Frame in Forex Trading? I agree to the Terms of Service. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.

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