In today’s forex commentary, I’ll reveal how to use a forex trading strategy that actually works to take a conventional trade in the forex market. Today’s currency of focus is the EURUSD.
The EURUSD is the most traded currency on the forex market. It is a useful currency with which to trade this strategy because there are times the currency trend and other times that the currency range-trades.
In order to take this live trade on the EURUSD, we will use the following tools which I’ve already written about on my Forex blog:
1) Trend lines as support and resistance.
2) The automatic pivot calculator to determine support and resistance points.
3) The Stochastics oscillator which is used to determine periods in which the market is overbought or oversold, especially when the market is in a period of consolidation.
4) A fundamental news release concerning the Euro (the Eurozone finance ministers meeting)
On the chart, we can clear see the price action at the lower trend line (which was plotted by connecting the highs and lows on the 4hour chart below to form an ascending channel.
The next step was to identify the setups which followed to produce a buy entry signal:
1) A hammer formed at the lower trend line.
2) The point at which the hammer formed was exactly at the S1 support level as shown by the pivot points plotted by the pivot calculator.
3) The Stochastics cross forming at
4) Final confirmation provided by positive news about a new bailout with relaxed conditions for Greece; a Euro positive piece of news.
The next thing was to pull the trigger in the BUY direction.
The results of the trade are shown in the forex account statement as follows:
I closed the position early, but had we left it, we should have closed off at the upper trendline, which also corresponded to the R1 point for at least 120 pips.
This is an example of a trade strategy that combined several indicators, some fundamental analysis and common sense, which are all the ingredients a trader needs to succeed in the forex market.
