Successful Foreign Currency Trading Using Multiple Barriers

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Learning how to identify levels where multiple barriers are can be very profitable for traders. Various types of cost barriers are in the Currency trading market. It is common for currency pairs to reverse direction at these barriers. By learning how to combine them, people who trade may develop a plan of trading with higher probabilities of success. Some barriers have support and resistance levels, psychological barriers, and Fibonacci levels. Barriers on trend lines and at pivot points can also enhance our observation. Now we will look at the various types of barriers that are common in the Forex market.

Support and Resistance Levels

Support and resistance levels are huge turning points that the market has consistently respected in the past. When the market respects them more, then they become stronger Support is identified as the turning point where the buyers took control and the currency pair began to rise. Resistance is any part where the market finished rising and turned down. Support and resistance levels on larger time charts are considered greater than those on little time charts.

Psychological Barriers

Psychological barriers are identified as huge numbers. Any numeral with the last numbers of 50 or 00 is a great barrier. Any number with the last numbers of 000 is better. You will be amazed at how often a currency pair starts do die and changes direction within a few pips of a psychological barrier.

Fibonacci Levels

Fibonacci lines are used often to determine if a point has the potential to reverse. Start with larger time charts and make Fibonacci lines on major moves. Go and mark all smaller moves. See where the Fibonacci lines, psychological barriers and support and resistance lines agree with one another.

Trend Lines

Draw trend lines to put a mark on all major moves and then go and mark the trends that arent quite as big. Where they exist, mark your parallel trend lines also. To do this, draw lines along the lowest points of an upward trend and along the tops of a downward trend.

Pivot Points

Most charting packages include either a calculator or a tool that makes your points where it can pivot. These are levels where the currency pair is likely to turn. Most tools and calculators give you many numbers both below and above the current levels of the currencies you are following.

Drawing lines to mark the various barriers that we always encounter in the foreign currency market can help us identify where a pair is likely to turn. Take note of those levels where multiple barriers agree. This strengthens the chance of making trades that will make us money. The more barriers that meet at a given number, the more significant that barrier is.

To find out more about these barriers and their application on your charts, check out our website and www.lotsofpips.com.

By: FindArticlesToday.com

JARED PASSEY has worked with hundreds of people trading foreign currencies, has created several successful strategies, trades professionally AND manages a forex fund. He enjoys helping traders and holds a free weekly forex analysis trading club. (You may use this article on your website only if the above link is in place.)

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