Hi @MattyMoney,
Please forgive my unsolicited but hopefully constructive criticism of your chart analysis. I believe you are missing one very critical piece of information.
Yes, this overly simplistic catchphrase ignores some very critical details missed by the majority of traders:
- trend… which trend? There are multiple trends in different timeframes happening at once and it’s important to understand which trend is which
- uptrend = higher highs / lows, downtrend = lower highs / lows. Seems simple enough, except how do you identify which high / low belongs to which trend?
Traders who don’t understand these points above will get confused and lost in the fractal nature of market movements. They end up struggling and often complain that trend analysis feels “subjective”.
The Power of an SMA
As I stated countless times, moving averages are the best indicators on the planet. They are however misunderstood and misused by the majority of traders.
Two humble SMAs can change your trading life. Take a 10 period SMA (I even smooth it out by 5 periods) and slap it on a chart. There are your highs and lows correctly identified for the timeframe. Then add a 2nd SMA for the next higher timeframe, e.g. for a daily chart => 10 week SMA = 50 day SMA. The 2nd SMA will correctly identify the correct highs and lows for the larger / dominant trend.
Don’t worry about them being “laggy” as we are not using them for trading signals but for their intended purpose: technical analysis
Let’s start with WTIC:
I have 3 SMAs here, red for the chart timeframe (weekly) showing the intermediate trend, yellow for the next higher TF(monthly) showing the long term trend and blue for an even higher TF (quarterly) showing secular trend. What they together show is WTIC’s first leg out of a secular bottom (blue SMA flattening and starting to turn up), then a pullback and a sideways consolidation. The blue SMA suggests that the ongoing move down may not last very long, i.e. a fake breakout in making.
GBPUSD
I agree with your GBPUSD chart and the trends are obvious enough to easily identify.
EURJPY
EURJPY similar to WTIC, uptrend then pullback and consolidation. The yellow intermediate SMA is however suggesting an emerging intermediate bull trend.
GBPJPY
Consistency in trading starts with consistency in analysis. GBPJPY was a bit more complicated in that there was a long term downtrend (as shown by yellow SMA) that was broken, suggesting that this pair is on the verge of a long term uptrend.
In my opinion, your trend channel started on the “wrong” high as it was part of the previous downtrend. The intermediate yellow SMA shows where the intermediate uptrend actually started, which gives a much steeper upslope and a much earlier signal of trend change. The slope of the of the 2nd higher TF SMAs also provides a great guideline for the “correct” slope of a trendline or channel.
It’s unfortunate that so many amateur traders dismiss moving averages as useless when really they are misunderstood and misused, in my opinion.
Hope this was helpful.