7/29 Analysis: Why Momentum Is Critical
Momentum is such a strong factor in determining which trades to initially take. At the London open, there are no currencies right now showing any current momentum in the market. These aren’t ideal conditions and you should show patience at this point by not entering any trades.
However, if we fast forward into the session a bit, we see this pattern developing on the indicator:
Now, we see the USD (blue line) heading back up and the NZD (purple line) getting weaker. This still isn’t enough to enter immediately but you certainly can keep an eye on these two currencies.
Fast forward a bit more and you see this:
This is the kind of pattern we look for, see how the lines to the far right are steep (up in the case of the strong USD and down in the case of the weak NZD). This indicates the kind of momentum that allows you to jump right in with a market order.
- NZD/USD SELL
If you would have jumped in with a market order here, this move went down by about 30 pips. Now, this market has been pretty quiet all session but you can see how entering at just the right time and having the patience to wait out the right conditions will lead to profits while amateur traders are jumping in and out not knowing what’s going on and losing money.
You can watch the entire video analysis below:
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. 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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