No Bullshit Forex Blog, A Part of No Bullshit Network

Hello Forex Fans!

Jude has asked me to do some writing for all his bloggers. Of course I couldn’t pass up the chance to be famous, so I accepted the challenge.

The things I will be writing about in the future will be anything from trading methods to actual trades them self. So hang on to your seat, cause we’re going for a ride!

Tonight we are going to touch on basic chart reading. Most people that Ive talked to use 5-30 minute charts. While this is fine for scalping, it rarely produces anything feasible. I would recommend using the 1hr and 4hr charts and only using lower minute charts to check current price action.

The first thing you want to look for and establish is the trend. this can be done with moving averages. On a one hour chart, put up a simple moving average of 100 and a exponential moving average of 100. When the 100 ema is above the 100 sma we are in a up trend. Vise versa is a downtrend.

Now the trick is never to short in a up trend and never go long in a down trend. This will without a doubt help your winning to losing average.

Now there are times when the market is in a consolidation mode, like it has been this week. How can you tell? One way you can tell is by an RSI set on period 24. If there is an uptrend the line on the RSI will be above the 50. If you look at the chart below, you will see where the uptrend starts and where the RSI goes above the 50 line. As long as we’re in the uptrend, the line should stay above the 50. Once it comes down and touches the 50, we need to wait for the next trend to show itself. If it wavers back and forth we are in a consolidation period. You can tell this by the lines on the chart being flat.

If you keep your trades long in a uptrend and short in a downtrend, and stay out when the market is consolidating, you will find that your profit will be more than your losses.

Until next time……………………
Humpty

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