This step is necessary to prevent moments at which the
currency pair goes against his primary trend. In order to identify an ideal
trading scenario, traders should look for in a downtrend on a series of lower
lows and lower highs over the course of at least a full week of trading. This
can be found out with the method outlined below.
The block method for the identification of short-term
momentum is used to halve the trading week to ensure that the short-term
momentum corresponds to a longer trend.
We see the AUD / USD is divided into
blocks down by the previous Wednesdays and Sundays are identified on our chart.
It is important in this analysis to identify a currency pair recorded the lower
lows and lower highs, which corresponds to our downtrend. If the price exceeds
the previous high, which is currently at 0.9695, traders would realize that the
short-term momentum is at a turning point and look for another opportunity for
trading.
Learn Forex -AUD/USD blocks
(Created Using FXCM Marketscope 2.0 charts)
Now that both the trend as well as the momentum were
identified, traders can apply the scalping strategy of their choice. It is
important to remember that although this analysis has examined a pair for
trading, but the trend may reverse anytime. Therefore, all scalpers should
always position on each new stop order set.
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