GBPCAD Technical Analysis

As shown in the chart below, daily price action broke above the resistance level at $1.64 to print a higher high around $1.66 zone. Following this higher high, price has now pulled back to find support at uptrend line and the EMA’s. Forming a breakout and a pullback to its previous support structure.

On the 4H timeframe following the retest of the uptrend line, price has broke above all of the key EMA’s and now pullback to retest them and also the price support 1.64.  Price has also printed a Bullish candle with a lower wick signalling the build up of Bullish pressure.  A break and close above the 4H bullish low test candle would confirm further Bullish bias for this Forex pair. 

How I came up with my first Forex Trading Strategy

You don’t necessarily need full blown strategy to start back testing. Because no strategy goes into my real money account before a solid multi year backtest. This is what I did. I hope this will help you come up with a new strategy or tweak your exciting trading strategy.

When you start to work on your Forex trading strategy :

  • Decide if you would like to come up with one of the following ( if you are new, stick one of these until you have mastered this)
    1. Trend Continuation
    2. Trend Reversal

I would advise newbies to start with Trend continuation since Reversal are bit more complicated and you need to take a lot of things into consideration.

I picked trend continuation. From here it’s an open playing field. But keep in mind that we are still building a strategy. I’m a technical trader who uses candlestick signals, trend line, EMA’s and Support & Resisntace levels to alert me on a possible setup. That said, for now you are going to focus on two candlestick signals.

Let keep it simple and focus on Engulfing candles and Hammer Candles(aka Low/High test candlesticks)

Now that you know what type of candles sticks you will be focusing on, let’s get deeper into the strategy building part.

I will be discussing a LONG(Bullish) strategy but reverse this if you want to build a SHORT(Bearish) strategy .

In order for price to confirm that we have a bullish trend we need to see price making at higher highs and higher lows

Using a web application such as Tradingview you will go back in time on a Forex pair to point where the price has a Higher Low and a Higher High.

At this point once price has formed a higher high, we analysis how price hs acted. Most of the time following a higher high price would pull back to a key level.

This level could be a previous resistance point, now turn into the support level or a key Moving Average. This is where you need to be creating and start adding and removing Moving average(MA). In my opinion keep it simple and stick to 2 -3 MA’s.

For an example let say once the price formed a Higher high price pull back to a 20 MA and a support level and printed Hammer candle stick signal. In your next step you want to go back in time may be 3 -5 years check to see how price acted every time your criteria was present.

NOW THE BACK TESTING STARTS.

You want to document every win and loss to understand the W/L Ratio. You can even add an indicator such as MACD, Stoch and RSI as an added level of confirmation.

All in all keep the indicator to a minimal and

NEVER GET INTO A TRADE BECAUSE YOUR INDICATORS LINED UP. PRICE IS KING.

GOLD (XAUUSD) setting up for a another push up

Daily price action has made a higher high at $1.557 and now has pulled back to its previous structure level at $1.500.

$ 1.500 price zone has provided multiple support levels arising from Price Support & EMA support.  One thing watch out is if this pull back start to form a Bearish Flag.  Ideally I would be looking for a Intra day 4Hour pattern as my entry trigger. Also supporting our Bullish bias is last week’s close, which closed as a Green candle with barely any wicks.

Daily Timeframe
4hour Timeframe

From a 4H timeframe, price has been able to close above all 4H moving averages and all three are nicely hugging each other , which brings added strength if this were to shoot upward.

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