I picked USD/CAD and I chose a section that would allow me to demonstrate a few different concepts. I suggest that you open up your charts to the same location so that you can follow along. I’m going to be brief and write points rather than lengthy explanations.
Price moves in a fractal pattern. It moves from one high/low to the next high/low. When price turns you should make a guess as to where it is likely going to end up before turning again.
First consult the weekly to get a sense of whether price is about to turn and for the direction. On the daily chart mark out a section (yellow rectangle) when the daily wma crosses and extend the section to the right and bottom. The bars following the wma cross will not be there when you mark out the region.
The bottom of the region you’re going to markup is obtained by looking at the next available support region. When you switch to the H4 chart, this colored rectangle will remind you of the boundaries that you are working within. Mark out the support region or demand zone as some call it in a different color so it is clearly delineated from the tradable region. I’ve marked it in lavender. (See the video below to see how to mark up supply/demand regions.)
I’ve put notes on the chart as to why I picked that support region. The green wma is a close of 7 periods. The blue wma is an open of 7 periods. The RSI is a 5 period with OB at 75 and OS at 25. Red dashed vertical lines were drawn on the H4 and are all opportunities to go short after the first short taken on the daily when the wma crossed and the daily bar closed.
I’ve attached images of the weekly, daily and H4 annotated charts of the marked out section. If you have questions please ask.
