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Today in forex trading the AUD/USD gave a buy signal on The Forex Heatmap®. The Australian Dollar (AUD) strengthened on all pairs, and other currencies like the USD, NZD, and GBP we weak or somewhat weak, and this drove good price movement. Pairs like the AUD/USD moved up but this pair is inside of a short term trading range. The AUD/NZD moved higher and is trending on the larger time frames, looks like a hold to about 1.1400, which is the next resistance area. Also the GBP/AUD broke support and is trending lover, it also looks like a hold as it is also trending down on the higher time frames. The trading signal system you see below is called The Forex Heatmap®, which provides live trading signals for 7 major currency pairs and all 28 pairs we track with our trading system.

Forex Trading Signals AUD/USD 9-3-2014

The GBP/CAD trend chart indicates that this pair is trending down on the larger time frames, like the W1 time frame shown below. This pair has hundreds of pips of potential and we would start looking for sell signals going forward. The current support level is just below 1.8000. You can set a price alert here, and when the alert goes off verify your sell entry with The Forex Heatmap®. The British Pound (GBP) pairs are currently trending on many of the pairs we follow. The chart analysis you see below is performed with multiple time frame analysis by individual currency.

GBP/CAD Chart Analysis 8-27-2014

Any forex trader can quickly learn to locate the trends of the forex market with some easy to set up moving averages. Trading forex trends on the larger time frames will ensure that traders always have a good level of success by not going against the market. Applying some filters like support and resistance  will help traders to locate a profitable entry point into the market trends across 28 pairs and 8 currencies.

Benefits Of Trading Forex Trends

The benefits of trading forex trends are numerous. The forex market is a trending market. Most trend cycles tend to last for several days and can go on for weeks and some times months. Getting into a trend and riding the trend, letting the trend do most of the work is a sharp contrast to trying to scalp 10 pips every day using technical indicators. Trading forex trends on the higher time frames, H4 and larger, will result in less trades and more potential pips per trade. Even novice forex traders know that the pips are in the larger time frame trends, they just need to adjust their style to capture more pips. Any trader can inspect trend cycles on the H4 time frame or larger over time to prove to themselves that trend trading is the place to be.

Set Up The Moving Averages

The first thing a trader needs to do is to set up their trend indicators.  In order to locate the trends on the forex market you should first set up some moving averages. These free forex indicators are not complicated to set up or interpret. These are some basic exponential moving averages with two colors, green for the 5 period and red for the 12 period. You can set up these trend indicators up on almost any forex charting  platform. Some of the images you see in this article will show you how the trend indicators look on a Metatrader platform. The trend indicators can be set up on any group of pairs you wish, including the 28 pairs comprised of the eight major currencies we follow on a day to day basis. The eight major currencies are the USD, CAD, EUR, CHF, GBP, JPY, AUD and NZD.

Locate the Trend

Now that we have a set of trend indicators, we can work on locating any exiting trends. When looking for trends always start with the largest time frames like the MN and W1 time frames and work backwards through the smaller time frames. Drilling down the charts and trends this way is called multiple time frame analysis. Multiple time frame analysis can be learned by any forex trader and is a powerful technique for market analysis.

Trading Forex Trends – Nine Time Frames

If you find strong uptrends or down trends with the larger time frames, this is good news for any trader who intends to always be trading forex trends. For a pair that is trending up the red and green lines on the moving averages will be pointing up and separated, for a pair that is trending down the moving averages will be pointing down and separated on that particular time frame. See the image below for an example trend.

If a trader also sets up the moving averages by individual currency they can start to make more pips much faster. Set up your moving averages grouped together with one common currency. For example, if you set up all of the EUR pairs together, it will be much easier to spot EUR strength or weakness in the market. For example, if all of the D1 time frames are pointing up on the EUR pairs, you know the EUR is strong and can be traded in that direction. This also allows pairs like the EUR/CHF, EUR/CAD and EUR/JPY, plus other EUR pairs, to be considered for trading. If you would like to determine individual currency strength for 8 currencies, check out our forex market analysis spreadsheet.

Filter Potential Trades With Support and Resistance

The experience of trading forex trends can be enhanced by filtering potential trades with support and resistance. Look at the example below. This is the GBP/AUD pair, it is trending down on the W1 time frame. So you have located a pair that is trending down, now you would like to filter support levels to see how many pips you could possibly make by selling this pair.

In the example below the GBP/AUD is trending down on the W1 time frame, which is a large time frame. This pair could trend much lower and the next support level is hundreds of pips away, this is a great trend trading opportunity. You could set a price alert at around 1.7700 (see top yellow line), it has 800 pips of potential below there, which is fantastic. Trading forex trends on the large time frames can provide superb pip potential compared to any scalping methods.

Trading Forex Trends – GBP/AUD Moving Averages

If a pair is in an uptrend on one of the larger time frame you could do the same thing by filtering resistance levels, since you are trading in the opposite direction.

Locate The Trade Entry Point

At this point the trader knows the direction of the trend, the time frame, and the pip potential. Now the trader needs a verified entry point to sell this pair. The final filter is the entry point into the trend. When you have a break of support or resistance on any currency pair it is easy to be notified with an audible price alert, which can easily be set on most trading platforms. These audible price alerts can also be sent to your email or phone.

When you get the price alert, yo know that the support has been breached. At that point you need to verify the sell entry into the trend. In the example above the GBP/AUD is trending down on the W1 time frame. If you were to get a price alert that support was broken on the GBP/AUD at the first support level, denoted in yellow, you would then check the entry signal to make sure you have a valid entry point. Then you can enter the trend safely and start to ride the trend for several days or possibly longer. The signal system you see below is The Forex Heatmap®, in this case the GBP is weakening and it is likely safe to sell the GBP/AUD.

Trading Forex Trends – GBP/AUD Sell Signal

This image shows an example of GBP weakness on the heatmap,  and this signal would validate the entry point into the larger downtrend on this pair. You would then execute a trade to sell the GBP/AUD, in the direction of the trend. Is might also be possible to sell the GBP/AUD if the AUD was consistently strong. The heatmap works the same way for 8 currencies and a total of 28 currency pairs.

Trading Forex Trends May Not Be Possible In Non Trending Markets

If you are interested in trading forex trends you have to realize that sometime the forex market is not trending. In this situation many pairs may be ranging or oscillating between support and resistance. In this case you can trade pairs that are ranging in wide ranges and on the shorter time frames. If you would like to trade ranging markets with the same set of moving averages and tools, check this great article about trading ranging forex pairs. In this case your risk to reward ratio is lower on each trade. Tools like The Forex Heatmap® become more valuable, along with money management skills.

Trading Forex Trends With Moving Averages

Conclusions about trading forex trends with moving averages: Moving forward from scalping the forex market to trading with the trend on the higher time frames is certainly possible with the tools and indicators shown in this article. We believe trading with the trend or ranging markets can be successfully traded and pip totals can be increased for almost all traders.

The GBP/CHF analysis indicates that this pair could be building a larger downtrend on the W1 time frame. The W1 trend is now crossing to the downside, the D1 trend is already pointing down. Start looking for sell signals on the The Forex Heatmap® starting tomorrow morning in the main session below the 1.5125 price alert point, which is the intra-day support level. We do not know the exact support target for this pair but the GBP/CHF could easily drop for a couple of weeks. The EUR/GBP, which moves inversely to the GBP/CHF, is also building an uptrend on the W1 time frame. The analysis of the GBP/CHF pair was conducted using multiple time frames.

Currency Pair Analysis GBP/CHF 8-13-2014

Today in forex trading the GBP/NZD signaled a sell on The Forex Heatmap® in the main session. The British Pound (GBP) was weak on all pairs, driving good short term price movement on these pairs. The Australian Dollar (AUD) and New Zealand Dollar (NZD) also had some strength today, this caused the GBP/AUD and GBP/NZD to drop. The GBP/AUD dropped, however this pair is inside of a cluster/range so we wold scale out lots on any sells. The GBP/NZD also dropped and this pair should continue trending lower to the next support area at approximately the 1.9650. The live signal system you see below is The Forex Heatmap®, which provides live trading signals for 28 pairs.

Live Forex Signals GBP/NZD Sell 8-13-2014

A profitable forex strategy that leads to successful trading is possible for any forex trader, using the guidelines shown in this article. Trading the forex market profitably can be accomplished by knowing what time of day to trade, having a set of accurate signals that are easy to interpret, and reading the trading signals correctly. Determining if the market is trending or ranging is also beneficial. Follow the guidelines and steps listed below to ensure that you have a profitable forex strategy that leads to much better trader.

When To Trade The Market

The best time to trade the currency market is in a 4 to 5 window of time just before the opening of the New York Stock Exchange. This is when forex trading activity is highest and you see strongest movement cycles. The currency pairs have longer movement cycles during this time. We refer to this as the main session. It is also possible to trade in the Asian session using the techniques in this article, but you should wait until you have one year experience before attempting to do this, due to lower volatility and shorter movement cycles. Executing trades in the Asian session in addition to the main session will naturally give you more pips and more profitable forex trading, especially if you trade many pairs.

Reading The Trading Signals

If you read your trading signals properly you can enter buys or sells in the main session and start to bring pips into your account. This is true for intra-day trades, or trade entries into the existing trends. One of the best signaling systems available is The Forex Heatmap®. Most forex traders only trade the EUR/USD. If a trader wants to buy the EUR/USD you can look for EUR strength across the board on the heatmap, like the example below, a strong 1.71% movement on this day.

Profitable Forex Strategy – Trading Signals

Most EUR/USD traders really need a signaling system like this. The good news is that the heatmap works to provide buy and sell signals on 28 pairs, not just the EUR/USD. So naturally your high quality trade opportunities and profits trading the forex market will increase quite a bit with a signaling system like this, due to having many more trading opportunities.

Trading Larger Trends

Trading in the direction of the major trends of the forex market will always be part of any profitable forex strategy, and naturally make successful forex trading a reality. All you have to have is a simple set of exponential moving averages to check the trends, then focus your trades in the direction of the higher time frames, H4 and larger. This way if you enter a trade and are going in the direction of the trend, you have a chance for additional profits tomorrow and the day after that as the trend continues.

Profitable Forex Strategy – Larger Trends

Profitable Forex Strategy For Trading Ranging Pairs

When the forex market is not trending, it is ranging. Ranging pairs are pairs that are cycling up and down inside of support and resistance. If you would like to trade pairs that are ranging, just make sure that they are ranging up and down in at least a 100 pip range so your money management and risk/reward ratio is solid. All trades carry risk so the potential reward must be fairly large. You can check the moving averages for the amounts of the ranges. Make sure the pairs you range trade are ranging on the H1 time frame or larger.

Economic News Calendar

Another component of a profitable forex strategy would be to know when the news drivers are, related to the pair you are trading. For example if you are trading the USD/JPY you would want to know when all of the strong economic news drivers were scheduled for the USD or JPY currencies. There are many economic news calendars available on the web, here is a handy world economic news calendar we like on our website. It shows the news drivers for all eight currencies we trade, along with other currencies too.

Risk Reward Ratio

Before entering any forex trades, forex traders should also know the risk reward ratio of every trade they enter. This ratio can be calculated in advance so you can decide yes or no well ahead of seeing any buy or sell signals for that pair. Example: A trader is considering buying the AUD/USD, when it breaks the short term resistance, the next resistance major  is 120 pips away form the breakout point. If you buy the pair and open the trade with a 30 pips stop, then 125/30 is 4 to 1 positive money management ratio. This is a great ratio because even with only 50% accuracy you can grow your trading account at a very high rate with ratios like this. You risk 30 pips with 120 pips of profit potential.

Today in forex trading The Forex Heatmap® signaled a sell on the CAD/CHF. The Canadian Dollar (CAD) was weak on all pairs. There was also some Euro (EUR) strength and Swiss Franc (CHF) strength in the market. This caused the EUR/CAD to move higher and the CAD/CHF to drop. We would scale out lots on both trades, as these movements were against the larger trends on the higher time frames.  The trade signals you see below are from The Forex Heatmap®, which provides live trade signals for 8 different currency groups and 28 pairs.

Forex Trade Signals CAD/CHF Sell 8-8-2014

Today in forex trading the AUD/NZD had a sell signal on The Forex Heatmap®. The Australian Dollar (AUD) started to weaken in the Asian session after the AUD employment report news. There was also some New Zealand Dollar (NZD) strength in the main session today, which drove this pair lower. The AUD/NZD is currently trading at the 1.0925 support level, we suggest taking some profit at this support level. The signal system you see below is The Forex Heatmap®, which is a visual map and indicator system for the forex market, it provides live buy and sell signals for 28 pairs.

AUD/NZD Sell Signal 8-7-2014

This is the chart analysis of the NZD/JPY on the D1 time frame. The trend chart below indicates that the NZD/JPY is cycling down on the D1 time frame. Current support level is at 86.25, see the two yellow lines on the right.

Traders should set an audible price alert at this support level. When the alert hits and below that price, we would look for a confirmation sell signal on this pair on The Forex Heatmap® forex heatmap. If this pair breaks lower the next target support area is around 84.75, or about 150 pips below the alert price. The charts you see below are 5/12 exponential moving averages set on the meta trader trading platform. These simple trend indicators can be set up on any forex brokerage platform.

NZD/JPY Chart Analysis