Forex traders have a variety of options when it comes to trading. However, those traders who are looking to peruse scalping opportunities will most directly benefits from identifying the strongest and weakest currencies, while identifying inter day price action including levels of support and resistance. To help us with this task today we will be using the Strong Weak app coupled with Camarilla Pivots. Let’s begin!
Picking a Currency Pair
Scalping is all about momentum and market conditions.
This means traders should be actively looking for pairs where a strong
currency is pitted against a weaker one. The reason for this is to
identify an active market trend in witch to participate. Below we can
currently see the GBPJPY listed as a weak currency using the Strong Weak
Application from the FXCM App Store. Knowing this, traders will look
for opportunities to sell the pair while looking for scalping
opportunities.
If you are unfamiliar with
Strong Weak analysis, that is ok. You can review the app along with two
of its uses through a series of videos linked below. After
clicking on the link, you’ll be asked to input information into the
‘Guestbook,’ after which you’ll be met with a series of videos along
with additional information regarding the Strong Weak application.
Risk Management App and Review via Brainshark
Learn Forex –Strong Weak App
Scalping A Retracement
Once a currency pair has
been selected for trading, it is time to pick a strategy for trading. To
help aid in this decision, traders can use Camarilla pivots to identify
key technical levels for trading. Below we can see these pivots in
action with key levels of resistance labeled R1-4 and support labeled S1-4.
The first
methodology of trading pivots is to look for a retracement. Retracement
traders will look for pullbacks in the trend and look to enter the
market near a point of support and resistance.
If price is in a downtrend, such as the GBPJPY, traders will look for
price to move to resistance and then enter fresh sell orders. Below we
can see price action from this morning’s trading of the GBPJPY. First
price moved up to resistance (R3), before momentum returned to the
market and offering traders their first opportunity to enter fresh
orders.
Learn Forex – GBPJPY with Camarilla Pivots
(Created using FXCM’s Marketscope 2.0 charts)
Trading a Breakout
The second
methodology of trading Camarilla Pivots is by looking for a breakout.
Above we can see a breakout occurring today on the GBPJPY at the S4
support pivot. S4 represents the last line of daily support for a
currency and in a downtrend and can offer a distinct area to enter new
sell orders. This process can be inverted for an uptrend, looking to
sell a breakout above the R4 resistance pivot.
These are just
two of the most popular ways to approach scalping Forex pairs with
pivot points. Now that you are more familiar with this methodology, you
can practice what you have learned using a demo account. You can get
started by registering for a Free Forex Demo with FXCM. This way you can develop your trading skills while continuing to track the market in real time.
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