Forex Trends - Trend is your BEST Friend Following GBP/USD Trends on multiple timeframes

I decided to write about what I learnt about technical analysis - if I may - I would like to generalize and and create two umbrellas - touch & go - and Breakouts.

Touch & Go - is where the market touches a point & reverses itself - the point is only valid if the market reverses itself - as may wise-old men say that “predicting the bottom or top is nothing but folly of the youth” - I humbly suggest that we have ample evidence to the contrary - many markets moves can and sometimes wisely predicted by these same old wise-men who left us the following:

1. Double-top: This is a touch & go - almost always I noticed that the best forming double-top come in a hurry near the top - they come like lightning - and for the naive trader it seems that the possibility of double-top is a myth - but as it unravels - its like a ball bouncing off a ping-pong table - it hits the points (and even crosses for a few more pips it as if the brakes failed) - and makes a u-turn so fast that it leaves you dizzy. Before you realize, the market reverses itself 20 to 50 pips from a few seconds to a few minutes - why does it happen? - simple, the buyers decided that the previous-top is where they intend to get out - and it triggers a huge-sell order rampage - which pushes the market down from that very point - creating a double-top.  So, can we not predict the reversal? - you decide.
2. Double-bottom: same as double-top just the opposite direction - here bears decided to unload their positions - creating an opposite effect - huge-buy order rampage.
3. Other various points: there are many points in market - which act are resistance - like last previous high and last previous-low - which are used as an indicator for many traders to predict the current trend - as long as previous-highs are not being tested or violated - then its bearish market - likewise, as long as previous-lows are not being tested or violated - then its bullish market - these points being resistances & support - are only one “touch & go” away to become new bottoms or new tops.

More times a point becomes a “touch & go” point the more valid it is to the market - ie., traders

I personally like touch & go’s - coz they tend to provide me with a clear stop-loss point (which is usually the next possible touch & go) - and more importanly, I close my trades if a “touch & go” is violated - then we are either in a “breakout” moment (see below) or some mystic session of the market which is searching for its own soul and direction.

 Breakouts: These are some of the most lucrative trading methods - they are as follows:

1. Breakouts from touch & go: if a touch & go point does not live up to its expectations (reverse the market from its current trend) - then the current trend is so strong that it intends to go ahead and CONQUER the touch & go - that’s a strong signal - an army invading a country with strong borders - if you don’t expect resistance at their borders with their fully-trained armed forces - what are the odds that the civilians within the country will put up any fight? - its basically game over.  Not so fast, don’t underestimate those stay-at-home-soccer-mom’s they might put up a fight -  if should their be an uprising within the invaded country to oust those invaders - how far will these invaders retreat before they come with more forces to take out the new uprising?  the question is do they even have extra forces in place to come back? (the point i am trying to make is how far is the retreat a correction of the market? - where do you put your stop-loss and say if the market having penetrated the touch & go should it return Xpips below that touch & go - I will say its a false breakout?) - breakouts’s biggest disadvantage is the not-so-clear stop-loss.

1. Ascending triangle & descending triangle: These are very clear breakout patterns - its almost as if the armies are being gathered before the big invasion - its like joshua’s army circling jericho - the very anticipation is overwhelming for the enemy - whose morale is first bought down before the walls -and the stop loss would clearly be at the longest-side of the triangle - although the stop-loss is clearly defined - it could far away from your comfort zone of loss - and false breakouts are not new to these triangles - especially over-extended ones - ofcourse, it does help to get some divine help as Joshua did.

So, you choose wisely - whether you want to trade “touch & go’s” or “breakouts” - but have its own advantages & disadvantages - mostly they have to do with your “appetite for loss” - remember, charts always repeat themselves - so even if you missed a chance - you are bound to find it next time - better a lost opportunity than lost capital.

and also don’t forget - even if you should conquer the whole world in a hurry - remember the words written by a historian about the greatest conqueror known to man - “When Alexander saw the breadth of his domain, he wept for there were no more worlds to conquer” - surely, somebody forgot to tell him happiness is a journey, not a destination - enjoy trading - take it slow - but learn it CORRECT the FIRST time.

Happy Trading!