Forex higher highs lower lows indicator

Practise does make perfect, especially when it comes to reading charts. So if you can use trade simulators such as forex tester or historical charts where you can't see the outcomes, that is a great way to practise spotting highs and lows.

Spotting the higher highs and the lower lows

I personally like to use the daily charts to identify opportunities, but then use the 65 minute chart to enter with a tight stop loss. As I said, this should definitely be more profitable than just using the daily chart, but not everyone has the time to sit in front of the screen all day when there is an opportunity. So you can trade it just off a higher time frame such as the daily.

Trading the forex trend using Price Action - forex

So after a long run of red candles showing a strong downwards move, we are looking for a low to form, and we get the following:

Still, you need a place to get started. There are three things you can start doing to spot highs and lows, at around the close of each new candle:

We then get to the lower high marked at 6. It was almost a pin bar. There was no way to know that this was going to be the swing high, but when the next candle printed at 7 this was very suggestive that we were now going to get a move down. Note also how the high of candle 6 pretty much equalled the low of the two consecutive dojis I mentioned earlier. This is an example of support becoming resistance.

First of all we have a higher high that was formed by two consecutive doji candles, signifying a trend change might be about to happen. The price then fell during the next candle, which was bearish. There were then two small candles that were pulling back, trying to rise, forming upper wicks. The fact that these candles were small and had upper wicks were suggestive that the primary move would remain downwards, and that this was just a temporary pull back.

Of course, it is easy to identify these highs and lows after they form. It is another topic to identify them as they happen - and I will get back to that.

5. The price falls back but then produces a bullish outside candle, forming a higher low within this swing low. It did not break the very next candle, but did signify that the next likely turn was upwards.

So far, so good, but probably the hardest thing is to identify these highs and lows as they happen. It is very easy to look at a historical chart and see them, but charts tend to look very different in real time.

8. You will want to see some momentum, so don't enter until the price breaks a significant high (if you are looking for a low to have formed), ideally on the next candle. Put your stop loss under the swing low.

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