Video Synopsis – Trading reversal bar systems in forex – 6-9-2009

In the above forex trading video we are looking at a live GBPJPY reversal bar forex setup that formed on the daily chart. This is for educational and training purposes only and is not to be considered a trading recommendation.

In this setup we are looking for 3 things:

• Uptrend

Daily chart uptrend carries a lot of weight, horizontal line at 151.10 broke out to upside. Moving average divergence indicates momentum is up. Prices are obeying the MA, short term momentum is extremely buoyant, and each time price hits the MA it bounces from it and closes higher. The uptrend is great but we need some confirmation to find our trading signal.

• Price action

The confirmation comes from a reversal bar, the classic candle bar “doji” or bullish pin bar reversal. The tail is pointed down for an uptrend continuation. We can only look at bars that are closed out to find our trading signals. This trade entry decision included the uptrend and then the bullish price action signal confirmation, the stop is placed just below the low of the pin bar

• Enter on retrace

Looking for a small intra-day retracement to get long, however we do not need to look at the intraday charts to do this, just keep your eyes on the daily chart. Intraday charts are much more complex; price action should be traded mainly on daily charts, especially for newbie’s. I started trading on simple daily charts, they carry a lot of weight and thus higher probability and they help with the emotional side of trading.

Check out my forex trading course for much more information on price action forex trading.