How to Build a Case for Trading Forex

Hello traders,

Many traders have got some problems on how to use multiple time-frames in their technical analysis. It’s very important to analyze the market from bigger time-frames and at last reach the smaller time-frame that we are more familiar with. Using monthly and weekly charts is the best way to determine the overall trend and then try to find best setups in daily, H4, H1 or any smaller time-frames you like.
I’m going to build a case for GBPUSD and start from weekly chart and go through the smaller time-frames:
This is the weekly chart of GBPUSD:

GBPUSD Weekly

GBPUSD Weekly

We have got three trendlines and some support/resistant lines here. Price bounced off the 1.6300 level last week and a daily bearish bar had confirmed that 1.6300 is a resistant line now.
In case of a bullish move I drew small lines from the previous highs and lows and they are considering as resistant lines and in the other hand you can see 1.6000 and 1.5650 levels as support lines.
Now let’s see the daily chart:

GBPUSD Daily

GBPUSD Daily

Price is far away from moving averages and we can see a ten day rally with a pause bar at the third day.
4th November formed a huge bullish candle and it shows that sentiment is still remains bearish for the greenback.

In the 4 hour chart below there is a short term trendline but it seems that 20 day simple moving average is acting as a support line now.

GBPUSD H4 Chart

GBPUSD H4 Chart

And at last we can see a 100pip shelf in the hourly chart of the pair below:

GBPUSD H1 Chart

GBPUSD H1 Chart

Conclusion:
Look for break of the shelf, in case of breaking it to the south then look for price action around 20 day simple moving average and that short term trendline. Going long around the 20sma will be a good position, but wait for the confirmation bars and any closes below the 20sma can force the pair to fall more and reach 1.6000. Take profits for going long around 20sma will be 1.6300, 1.6350 and 1.6450.
Beware of any retests of the trendline #2 in the weekly chart, this trendline has been in play since early 2009.

Regards

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  • Anonymous

    Thank you very much.

  • Pamateriales

    congrats and thaks man, great job explaining

  • It’s my pleasure fxretracer. Yes you are right, we have to wait for best signals and best signals depend on best money management.

    Thanks

  • Thanks Patricio, I appreciate your comment buddy.

  • Great article, all one needs to add to this is proper money management and you will be off and running in the right direction.

  • Great article Mani, I like it a lot. Thanks for sharing