Archive for November, 2009

Forex Trade Signal Based on Forex Double Top or Bottom Formation

To describe double top or we can use a term used in technical analysis to showing the rise or of a price,a drop,another rise to the same level as the original rise,and finally another drop.
Double bottom would be a charting pattern used in technical analysis.It describes the drop of a price,a rebound,another drop to the same or similar area as the original drop,and finally another rebound.Most technical analysts believe that the advance off of the first bottom should be 10-20 percent.The second bottom should form within 3-4 percent of the previous low,and volume on the ensuing advance should increase.

Double tops and bottoms are one of a hard price patterns to trade.There are few vital things to remember if you would place your trade forex signal based on such formation.

The absence of precise borders in such formations does not allow to trade signals based on plotting in advance.It appears to be quite hard to see clear trade signals about when to enter the market at the certain level and it also is hard to attach a stop loss strategy when placing such trade signal.

These formation s become clearer when the market already formed a pattern but it is too late to take an advantage of it and place trade signal based on double top or bottom formation.The main aspect which makes trade signals based on above pattern even more hard is the fact that they are usually meet other technical levels.Double tops and bottoms are normally placed on very similar levels as Fibonacci retracement levels or support and resistance areas.

As we already know the support and resistance areas tend to attract the price and become a significant base for constructing your trade signal.Near such levels we can observe the price trend swing or its continuation.Trading forex trade signals near to this level always carries significant amount of risk as there are a major turning point of the price trend.

Double tops and bottoms are the most hard to recognize as in most of the cases they would suggest the price trend change and the pattern would not be recognize until the price is back to the same level as before.Only then we can really consider placing forex trade signal based on double top or bottom.Such a behavior would not be clearly visible on the chart until is nearly fully formed.In most cases it could be too late to trade such signal.Even after fully formed double top or bottom,the forex signal given by the formation could be the fake one and the price could very quickly break through possible second top or bottom.It this case such signal is not valid and the price follows its trend and will make another technical level in the nearest future.

You never know where the market will go next and you should not forget this.Keeping this in mind,pay special attention while placing your trade forex signals based on double top or bottom price formations.

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Ok, we admit it, this is even a excellent trading week for us. A couple of weeks ago, when we made 700 pips we did it in a market that was incredibly volatile. There were 300 pip ranges throughout the week.

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This week, but, we have caught the entire range of Monday’s trading, Netting us 40 pips on one trade and 100 pips on another.

Using the same trading levels we got long last night, and again netter 140 total pips.

Although there were some fantastic reasons to go long during the pullback to 1.8850 at 8:00 pm EST, we didn’t take the long because we weren’t in front of the screen. That’s ok, no crying over spilled milk for us.

So, in the last two days there has been a total of a 160 pip range. We have grabbed 100 pips of it…YAY! Generally, the goal is 60% – 70% of the total go. So in this case we are right in that spread. Granted it’s the lower part of the range, but we are thrilled.

Our goal, even with all of our trading experience, is 100 pips per week. In the “Trading In Black And White Forex Trading Course” we go over a very detailed compounding schedule and money management system that clarifies this in detail.

So, now on to tonight’s trading.

Just like yesterday there is no clear cut resistance level to play. Also, just like yesterday we’re going to point out that there is a “make-shift” resistance level to watch if you are in front of the screen when price gets there. This is….drum roll…1.9000.

Face it, even just looking at that number makes you jittery, nervous, excited, SOMETHING! Whole numbers have that affect on traders as well. We like to watch them for fascinating trading activity. We discuss an entire trading strategy in the “Trading In Black And White Forex Trading Course” that revolves solely on huge figures.

So, if you are around if and when we get to 1.9000, pay close attention to price action. You might be able to find a excellent small or a excellent long based on what happens at that level.

Again, like yesterday, beginners should not be looking to trade at a level that does not present a more clear picture of resistance.

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As far as support goes, we will be watching a few different levels. Admittedly, we are conservative in our trading so you’ll be able to guess which level we will be watching most closely in a minute.

On the other hand, many of our traders are more aggressive than we are so we’d like to share all of our thoughts with you.

1.8890, 1.8860, 1.8820, 1.7760 are all “valid” support levels. Obviously, you have to be sure that you get excellent price action, especially at the higher levels.

We are going to keep an eye on the 1.8860 and below. That does not mean that 1.8890 is not a excellent trade. We have found a trading style that works for us, and we stay right to it. So far, out of all the styles we have tried with the FOREX, this has been the most consistent and profitable one.

You should take the time to learn how to develop YOUR OWN trading style. Too many so called Forex gurus teach you to mimic their trading styles. Well what excellent is that? What if their style no longer works, how are you going to adapt?

With the proper Forex trading education you’ll be able to decipher any of their systems, and ultimately develop your own. Believe me, there is no better feeling than being an independent trader.

We find these support and resistance levels using a set of technical indicators and other variables that we have found to be most successful for us. We use several other indicators and a variety of technical analysis techniques to enter and exit all of our trades. Every trader will have a different combination of indicators that makes the most sense to them. Learn how to develop your own successful Forex Trading style with our Elite Forex Trading Course or Forex Seminar.

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