5/22 Analysis: How to Adapt in Fast Changing Market Conditions
- Strong currencies above the zero line, weak currencies below
- Strong currencies getting stronger, weak currencies getting weaker
- Pay attention to the right hand side for steep lines (momentum)
The YEN (yellow line) is strong and getting stronger but there is nothing on the weak side to pair it against. When this happens, you need patience and should sit on the sidelines.
But only about 20 seconds into the London session, let’s have another look at the indicator:
Now the EUR is moving down with a steep line signaling momentum in the market.
You see how fast you can identify these changing market conditions.
The trade would be a EUR/JPY Sell.
Now, in this case the trend reversed quickly against us and we would have had a losing trade. This is important to show because losing trades are unavoidable as a professional trader.
Here is the most important thing to note with this. By looking at the individual currencies like this and seeing what’s happening in the whole market you can adapt very quickly as conditions change.
This is 9 minutes after the London open:
You can see the USD is strong and getting stronger (steep line up) and the AUD is weak and getting weaker (steep line down).
You can see the move on the charts as the AUD/USD went down over 100 pips.
You would have identified this early on just 9 minutes into the session. So you take a small loss on the first trade but by looking at the individual currencies and being able to adapt quickly to fast market conditions you would have gained much more on the winning trade. You would not see this while viewing currency pair charts because that is not looking at the real market.
Watch the entire video analysis below:
You can see that our Currency Strength Indicator is an effective tool for getting into the very best trends early on and allowing you to ride them out for maximum profits. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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