USD Scan Lining up Stochastics 20 July

The most important element a strategy has to have, besides being effective, is that you can repeat it over and over again. A lot of people believe forex is complicated – it involves complicated analysis, numbers, data, a program that you aren’t familiar with, a computer that you may not be familiar with, news that you have to follow, et al. For new traders it feels you are lost in a dark tunnel and that there will never be any light at the end of it. You know you don’t want to quit though everyday feels like an uphill battle. You start to think the market is out to get you – why is it every time you open a trade it goes against you – it almost feels like the market is waiting for you to pull the trigger. You keep at it hoping that today will be the day you get lucky. If you could just get it right then all those dreams you have for your life could be a little more tangible. Then there are those that quit and figure this is not for them, always telling people at social gatherings that the markets are far too volatile for anyone to make money and that the entire thing is one big fugazi. My advice to anyone that wants to start taking a step in the right direction is to stop trading. Yeah I said it. Stop trading. Wayne mentioned in a webinar once that he enjoys trading the most when he isn’t trading. Though while he isn’t trading he is watching and waiting with a strategy that has specific conditions, that when met result in him pulling the trigger. In the the last free weekend class I ran at GFI, for SA students preparing for Wayne’s masterclass on 8 August, I spoke about simplifying one’s trading as much as possible and having a clear set of conditions, that when met inform you to pay more attention and identify a trading opportunity. If the conditions have not been met then we sit back, watch and wait and enjoy not trading. When the green light comes on, we get ready to fire.
Creating this plan requires us to identify support and resistance, market direction and price direction which leads to us deciding whether we are a bull or a bear and then managing our trade and risk accordingly. For this week we are just focusing on support and resistance and price – more specifically lining up our stochastic cycles on our Daily, H4 and H1 time frames. Today we continue with that exercise though we are going to add another condition to our requirements – lining up M15 and M5 with the higher time frame charts. Due to us only looking at price, and not worrying about the market, we are practicing this exercise using demo accounts. We will be adding market to the mix once everyone understands this step. Also note that we are only using pivot points for support and resistance – once we are comfortable with that we will look at adding price action and dynamic support and resistance to our plans.
I have only provided a scan for USD pairs – go ahead and use the same methodology I have used below for the pairs you are trading.
Lastly – remember to always read the fundamental report Kate writes (http://forex.today/forex-major-currencies-outlook-july-20-2016/) so you know what’s going on with the news. Also keep track of the risk events on whichever fundamental news release calendar you use – if you don’t have one click News/ Calendar.

For the purpose of this exercise, one thing you could do is decide to trade daily charts with overbought and oversold stochastics and then line up the other time frames. If, however you want to get into a trade while stochastic is on the move then look at the direction of the stochastic and line up the lower time frame charts accordingly. Let's take a look at H4 and H1 and then decide what our plan is.

EURUSD: Daily moving down, H4 oversold, H1 moving up. Either wait for H1 to be overbought and find resistance or wait for Daily, H4 and H1 to be oversold and find support. GBPUSD: Daily moving down, H4 oversold, H1 moving up. Either wait for H1 to be overbought and find resistance or wait for H1 to be oversold and find support. Alternatively buy oversold M15 and M5 cycles. USDJPY: Daily overbought, H4 moving down, H1 below the 50 line though moving up. If H1 gets to the 50 line and you have an overbought stochastic on M15 and M5 and are at resistance, take the shot. Otherwise wait for an overbought H1 and find resistance. Keep in mind the market may be expecting further action from BOJ next week. AUDUSD: Daily moving down, H4 at oversold with H1 just below the 50 line and moving up. Follow the same plan as USDJPY. USDCAD: Daily below 50 line, H4 overbought and H1 moving down. Currently at resistance though would wait for an overbought M15 and M5 at resistance if I was going to sell. Alternatively a good time to sell this pair was last night at M4 when H4 and H1 were lined up. NZDUSD: Daily approaching 20 line, H4 moving up with H1 at overbought. Wait for an oversold Daily and H1 at support if you want to buy. If you want to sell you are at resistance. Oil: Daily flat though just above the 20 line, H4 moving up with H1 overbought. I am waiting for an oversold H1 and looking for support.

6 thoughts on “USD Scan Lining up Stochastics 20 July”

  1. alex p says:

    I like this Id love to see weekly updates

  2. Excellent post. Thank you for your awesome contribution!

    1. Thank you Wayne! It’s an honour and a pleasure!

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