Many traders in the foreign exchange (forex) market begin trading based on internal charts that measure currency price changes over time frames of five or 15 minutes, or they may use daily charts that show price changes for a single trading day.
Beginners often face difficulties when trying to use these types of systems. Shorter-term systems require more trading skills. You might be betting against a larger trend without realizing it. Weekly charts are more likely to reveal these types of trends.
Forex trading is about trading with the trend, so a weekly trading system is more likely to yield better results. It’s about using indicators on the weekly chart that can help you stay informed about the momentum trend. You are less likely to engage in trading based on minor changes within the larger trend.
Momentum Trading
You will notice that currency pairs rarely go straight up or down if you look at any forex chart. There is always some larger upward or downward trend. This larger trend is the forex version of Newton’s first law of motion. Bodies in motion tend to stay in motion unless acted upon by an external force.
A currency that is increasing in value often has many small ups and downs along the way, but it will be within a larger, more stable upward trend that continues until something in the market or an external event stops it.
Less Time Commitment
Weekly charts allow traders to see the bigger picture of the trend. They provide the additional edge as they require less time than daily or internal charts. Traders using a weekly trading system can spend more time away from their screens.
Trend Indicators
Four technical indicators can be very useful in determining trends and trading options on the forex weekly chart.
Moving Averages (MAs)
Moving Averages (MA) are the simplest of all trend indicators. They plot the average price of a currency pair over a time frame you set. The moving average can be simple, where prices are just added and divided by the number of prices, or it can be a weighted average that gives more importance to the most recent prices over previous prices.
Traders may choose to display moving averages for two time periods. They can buy when the shorter time frame moving average crosses above the longer time frame moving average. They can sell when the shorter time frame moving average crosses below the other average.
Stochastic
This indicator differs from the moving average chart in that it looks at the speed and momentum of price changes in the currency pair. The currency appears to have intrinsic strength if the momentum is rising. This is likely to continue, at least until something happens to stop it. It may be time to sell if the momentum fades.
Relative Strength Index
This indicator suggests that a currency pair may be overbought or oversold. It plots strength on a scale from 0 to 100. A reading between 0 and 30 indicates it is oversold, while a reading between 70 and 100 indicates it is overbought. A crossover of the middle line at 50 from above is a sell signal. A crossover from below is a buy signal.
Bollinger Bands
The name of this indicator is a trademark of its inventor John Bollinger. It relates to moving averages but uses a more complex process involving standard deviations above and below the moving average price. Bollinger Bands consist of three lines. A price move above the upper band can be a sell signal. A price move below the lower band can be a buy signal.
Trading
Using Multi-Indicator Charts
It is very rare for all momentum indicators to point in the same direction on the given weekly chart. Sometimes you will have to wait until they look better in combination. The key point is to trade small. Be patient. Use a small quantity (1000 units) instead of trading a small amount (10,000 units of currency). Price changes for trades on a weekly scale can be much larger than when you trade on shorter time frames.
Use stop-loss orders to determine the maximum amount you are risking on a particular trade. Use profit targets to identify exit points for winning trades.
Source: https://www.thebalancemoney.com/using-a-weekly-forex-trading-system-1344822
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