26/09/ · Trading can be a lonely endeavor and sometimes it is great to just be able to get out of the house and hang out with people who know what the heck you are talking about. We are a group of Forex Traders dedicated to helping you become a better trader. We welcome traders of all skill levels and backgrounds. Meetups will be both social and educational Trading Forex and Derivatives carries a high level of risk, including the risk of losses exceeding deposits. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks 14/04/ · This area is determined by whatever setup detection method you have written in your Trading Plan. An example might be the crossover of two moving averages or price hitting resistance on a Fibonacci retracement level. Your potential trading area stands between the current price and your entry trigger. We strongly suggest you take a screenshot of Estimated Reading Time: 2 mins
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Confluence areas in Forex trading are defined as places where more than one pattern shows the same direction. Technical analysis is one of the reasons why retail traders forex traders area to the currency market. The ability of patterns to help predict future prices has always fascinated traders and people alike. Forex traders area the early days of stock market in the United States, traders noted that the price forms similar patterns before significant advances or declines. Traders find it more comfortable to trade technical patterns in the same direction as fundamental analysis points to, forex traders area.
As always, discipline is critical, second to nothing in Forex trading. Support and resistance areas are key when looking for confluence, forex traders area. When traders use too many technical indicators or oscillatorsit is said that the chart becomes crowded. However, this is not the case when looking for confluence areas in Forex trading.
In doing that, the more elements pointing to the same direction, the better. The price of a currency pair meets two types of support and resistance : classic and dynamic. Classic means support or resistance forms on the horizontal. Think of double or triple tops and bottoms, for instance, as the most representative forms of classic support and resistance.
Dynamic, on the other hand, is more powerful. However, the balance of power changes when support and resistance combine with other patterns to form confluence areas in Forex trading. For instance, classic patterns forming at a dynamic level weigh more in the overall analysis. Contrary, two or more reversal patterns at a classic support or resistance will confirm the reversal.
The problem with most technical analysis concepts is that they lack practical examples. For instance, the chart below shows one of the most powerful and famous reversals in recent times, forex traders area. The USDJPY broke higher after the U. election showed Trump winning the White House. The market broke higher in an almost forex traders area line.
Have a closer look at it, as it shows essential characteristics. Firstly, forex traders area, it took more than four months. In other words, there is no excuse to miss the price action and the potential reversal patterns that formed there.
Instead, such areas form when the price finds it difficult to advance or decline regardless the reason. The first thing to note is a triple bottom that formed at the highlighted area.
The original concept of a triple bottom calls for the price to hesitate at the same level. As mentioned earlier, confluence areas in Forex trading have more than one factor pointing to the same direction.
In this case, the first thing to note is the triple bottom. Traders familiar with the concept of a triangle quickly noticed the pattern, forex traders area. As a reminder, forex traders area, in a triangular patternthe market forms a series of lower highs or higher lows until eventually breaks. In this case, the triangle becomes obvious by simply connecting the triple bottom and highlighting the lower highs.
The resulting trendlines converge, showing a beautiful contracting triangle that acts as a reversal pattern. Just like that, forex traders area, two reversal patterns formed at the same area. Hence, bulls had all the time in the world to prepare for a trend reversal.
What would be the best trading strategy in this case? Well, the idea is to wait for the upper side of forex traders area triangle to break. The so-called b-d trendline signals the end of the triangular formation. This is particularly important in the forex traders area of the USDJPY chart from above because the break of the b-d trendline comes after the market put a triple bottom in place.
Forex traders area areas in Forex trading reinforce a trading decision. Therefore, by the moment the price broke the b-d trendline higher, traders not only had a signal forex traders area go long but the market signals the start of a bullish trend. Between the two measured moves, the one that belongs to the triple bottom is the longest, giving a target that shows a much bigger risk-reward ratio than the desired Because the break of the b-d forex traders area happened BEFORE the U.
election, many thought the other candidate would win. Put it just, the USDJPY broke on risk-on and advanced on market participants realizing the potential. Besides classic support and resistance areas, forex traders area, psychological levels in Forex trading come to complete the picture. Look for round numbers to influence levels due to the human nature tendency to enter or exit at round numbers.
In other words, the price built the triple bottom on the psychological one-hundred mark. At this time, forex traders area, the confluence area had:, forex traders area. Was there anything else to consider that can support confluence areas in Forex trading like this one? Because of the triangle and the triple bottom are reversal patterns, any other reversal pattern comes to help.
Hence, in such an instance, look for Japanese reversal patterns around the psychological level to reinforce the bouncing potential. Japanese candlesticks patterns are known for taking very little time to form. All the patterns listed above take one, two or maximum three candlesticks to form. Hence, they provide a quick bias over the future direction, while the classic technical analysis patterns e.
When it forms during confluence areas in Forex trading, it further strengthens the forecast. As the majority of my followers know, I am strictly a price action trader and you can find more about my trading strategy HERE. While technical analysis gives the direction, the fundamental analysis forex traders area the reason why the market moves. Before important economic data like the NFP Non-Farm Payrolls markets take the time to consolidate.
But markets also consolidate before critical political events, like the U. For the entire summer, forex traders area, no trader forex traders area to take a chance on the dollar. Everyone looked at polls and how Hillary or Trump performed. As it turned out, any indication that Clinton will win the election was associated with a risk-on move.
More precisely, with the USDJPY moving higher. Hence, the break higher above forex traders area b-d trendline came as a fundamental reaction to a risk-on move. Or, it came to complete forex traders area technical picture.
Confluence areas in Forex trading that combine the technical and fundamental picture are difficult to ignore. In fact, traders look for both to complement the original trading scenario, forex traders area. The secret to finding confluence areas in Forex trading is to know where to look for them. In the example used so far, the psychological level is enough to spark an interest. As such, traders waited to see the market reaction on the psychological level. Next, they waited for potential reversal patterns to form.
And it did: triple bottom, triangle, and the Doji candle. Finally, they WAITED for the b-d trendline to break higher on fundamental analysis confirmation. Therefore, the trade opportunity was a result of a combination of factors aligned at a confluence area.
Now that the market bounced from the psychological level all of them are horizontal — hence, they offer classic support and resistancewhere should the focus be?
The answer comes from the left side of the chart. Traders use the info given by previous patterns and project levels on the right side of the chart to find areas where the price might hesitate. Yes, might, because nothing happens with absolute certainty. Important: This is why all trades must have a stop loss.
Wonderful technical analysis patterns, contracting triangles often appear in the currency market. Traders use them as either continuation or reversal patterns, focusing on the moment when the price breaks the b-d trendline. But triangles also project future support and resistance levels. Traders using this method use the apex of a contracting triangle that served as a continuation pattern to project future support and resistance levels.
Because the area is known in advance, traders use such places to find confluence areas in Forex trading. The same USDJPY timeframe saw an earlier contracting triangle that broke higher. Therefore, it acted as a continuation pattern, forex traders area. The triangle forming around the level proved to be a great continuation pattern. Therefore, if one uses the Elliott Theory to count waves, the brown triangle can be only one of the three waves mentioned above.
The apex of a contracting triangle is the intersection point of the two trendlines that form the triangle. More precisely, if the triangle is labeled a-b-c-d-e, the apex point forex traders area at the a-c and b-d intersection. Technical analysis concepts tell us the apex offer strong support and resistance levels are moving forward.
That is the area of the apex, not exactly the level. Hence, when the market broke higher from the confluence area discussed in this article, traders already had an educated guess where it might hesitate.
It remains there on the chart to act as a support or resistance for future price action. In this case, as the market shot higher from the forex traders area confluence area, savvy traders waited for the reaction at the possible resistance. Even the most bullish traders booked some profits when the price reached the apex. Because of the relative big timeframe this is the daily chartthere is plenty of time to look for elements part of a confluence forex traders area.
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, time: 8:39Confluence Areas in Forex Trading | COLIBRI TRADER
Trading Forex and Derivatives carries a high level of risk, including the risk of losses exceeding deposits. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks 26/09/ · Trading can be a lonely endeavor and sometimes it is great to just be able to get out of the house and hang out with people who know what the heck you are talking about. We are a group of Forex Traders dedicated to helping you become a better trader. We welcome traders of all skill levels and backgrounds. Meetups will be both social and educational Forex Traders Daily Members Area
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