Currency Exchange Studying How To Read Charts And Make Your Profits Explode

Step one in technical research is to be taught the simplest way to read the charts. Here are one or two basic lessons to steer your early attempts. When first researching a currency pair, keep an eye open for the current trend. Begin with the long run charts ( monthly, weekly, and daily ), going back for 1 or 2 years. Because these charts contain a bigger amount of information, they offer a more clear image of just what the currency pair is doing than the short term charts ( hour, half-hour, 15-minutes, or 5-minutes ). Identifying the trend is simple : just glance at the chart and judge whether the graph is going more up than down, or even more down than up. Trends can be steep or shallow, years long or weeks short. Practice identifying them, and finding the points where they change direction. The longest-term trend is the most powerful, which is another reason for taking a look at those charts first. Even if you're scalping or day-trading and do not plan to hold a position longer than an hour, you'll do better by trading in the same direction as the current trend. So trouble to spot it on maybe the daily charts before beginning. There's an old trader's announcing : The trend is your pal. It isn't a lie. When you have identified the trend in the long term charts, compare that with what you see in the near term charts. You will find that there might be any quantity of intermediate-term and short term trends in the trail set by the present trend. The graph will waver up and back down but generally it will follow the trail set by the longest-term trend.

Next, find the SR levels, which are the floor and ceiling points on the graph.

These are major points on the chart where the price often will not wreck thru, or only peeks through then gives up the fight. The price will go just so high or so low, but no further, it reaches that point then changes direction.

The more times that occurs, the stronger the SR are. Draw a straight line, either in your mind's eye or on the chart, passing through nearly all the support points. Then draw another passing through just about all of the resistance points. This gives you an image of the trail the currency pair's trend is following, called a price channel, and it is an easy but strong tool to help work out how that trail will continue.

When SR are dynamic, the graph of the currency pair seems to bounce along sideways between those 2 lines like a pinball.

These lines do not want to be level. However it's slanted, you can still trade within that range. When a currency pair breaks out of a price channel, regularly it falls into the channel, and on occasion it gains momentum and keeps moving. This last is called a momentum market, and it's the other way to trade the range : set an entry order for the price to break out, either above or below the channel, then relax and let it ride. Congratulationsyou now understand the most vital parts of basic technical analysis!

By: anthony miserlyjones

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