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CURRENCY TRENDS

Source: www.forex.com
Topic: Currency

Sort Desciption: CURRENCY TRENDS. Trends may be rarer than trading ranges, but that ... two things: 1) The first currency listed first ... base currency is weakening. ...

Content Inside: M any technical trading strategies revolve around the assumption that markets will hover within a given range and with good reason. Seventy percent of the time markets will bounce back and forth between support and resistance levels, or fluctuate randomly. The rest of the time, market behavior is characterized by persistent price moves trends that shatter support and resistance levels. Although these basic probabilities work against traders who try to exploit trends, the potential rewards can be worth the risk. It is possible to increase your ability to capitalize on t rends by locating trend signals, identifying specific entry points within the trend and using risk management techniques to limit losses. The following sections will explain how a trading system based on these concepts works especially well in the foreign exchange (Forex), or curre n c y, market, particularly with the major currencies the U.S. dollar, Euro, Japanese yen, British pound, Swiss franc, Canadian dollar and Australian dollar. More than 85 percent of transactions in the $1 trillion per day Forex market involve the majors. The strategy uses two charts with different time periods (10-minute and hourly), along with two technical indicators: a 200-bar moving average and a 14-bar slow stochastic study (see Stochastic 2 www.activetradermag.com October 2002 ACTIVE TRADER Cashing in on short-term CURRENCY TRENDS Trends may be rarer than trading ranges, but that doesnt mean they cant be traded. This strategy uses two time frames to identify the trend, an overbought-oversold indicator to pinpoint entry and a trailing stop to protect gains on profitable trades. TRADING Strategies Euro/U.S. Dollar (EUR/USD), hourly Stochastics (14, 3, 3) 12:00 3:00 18:00 9:00 0:00 15:00 6:00 21:00 12:00 3:00 18:00 9:00 0:00 15:00 6:00 18 19 20 21 23 24 25 26 27 28 1.002 0.996 0.990 0.984 0.978 0.972 0.966 0.960 0.954 0.949 0.942 90 60 30 With price consistently above the 200-bar moving average, the hourly chart reflect ...

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