Four days every week, from Monday to Thursday, I publish Forex signals (in fact, they are technical analyses) for the seven most popular USD currency pairs. Once they are published, I am not able to update them, and market conditions may change radically. My aim in publishing these signals is to give the best guidance, ideas, and interpretation as possible to Forex traders once each day as the markets open, focusing on intraday trading (day trading), due to its popularity over longer-term trading methods. In my opinion, it is easier for most people to make money trading daily charts, making buy or sell decisions no more than once per day, but I understand most of my readers are day traders and I try to accommodate their needs.
As the signals are designed to be as useful as possible for as long as possible, the primary tool I use within the signals is the identification of exact prices, or sometimes narrow price ranges at which the market is more likely to turn. These are generally known as “support and resistance”, but you can also think of them as pivotal points. All my signals identify at least one pivotal point, and usually will identify two: a price below the current price (as at the time of writing) which may act as support, and a price above the current price which may act as resistance.
How to Use Forex Signals
Each signal begins with a discussion of the prospect of any open trade that might have been generated by the previous day’s signal in the same currency pair. The piece then goes on to suggest the best times of day in which to open any new trade, and the position size that might be risked on a trade that day. The next section identifies likely support and resistance levels with an accompanying illustrative chart. Following the signal means taking note of these levels and watching during the recommended hours to see if the price reaches any of them.
When the price reaches a resistance level after going up, you wait to identify a bearish turn in the price, which means you think it is going to go down. When the price reaches a support level after going down, you wait to identify a bullish turn in the price, which means you think it is going to go up. The big question is, how to identify such a turn in the price at the point where it has a high probability to become the best point to enter a winning trade?
How to Identify a Price Turn
It is my belief, derived from experience, that the best price turns take at least one hour to play out, and usually more. There is a trade-off between getting in early and achieving a high potential reward to risk ratio, and waiting longer to get a surer turn. For example, let’s say that the price is at 1.0950 and the level at 1.1000 is identified as resistance, and the price then rises to hit the 1.1000 level, forming a strong bearish pin bar reversal candlestick formation on the 5 minutes chart. This might be a great entry and maybe the price will drop strongly and not come back to 1.1000 for the rest of the day, but being so quick to press the trigger carries a higher risk of being wrong. That is why I recommend waiting for at least one hourly candlestick to form before entering a trade. A bearish pin bar reversal candlestick is a stronger indicator on the 1 hour chart than on the 5 minutes chart.
