Forex technical analysis needs to be done right. If not, you could lose a lot of money. Doing a proper Forex chart analysis will help you make consistent, profitable trades.
Forex Chart Analysis Tips
1) Type of Trader: There are different ways to make money trading the Forex. You need to decide how you want to trade first. Are you going to be a day trader, swing trader, or go for a longer term investment approach.
2) Chart Selection: Selecting the charting time frame is next. If you are going to do day trading, you will to focus on the 5 minute, 15 minute and hourly chart. For swing trading you focus on the 15 minute, the hourly and the daily charts. For long term investing you spend most of your time monitoring the daily and the weekly charts.
3) Charting Analysis Order: For each trading approach from point number 1, you need to look at your charts from the longer time frames to the closes. For example, the day trader will look at the hourly chart first, then the 15 minute and then the 5 minute. The point of looking at chart in this manner is to give you an idea of how the currency pair is trending before you enter a trade.
4) Trade Entries: Once the trend is established, you will use the closes time frame to do your technical analysis on. Technical set ups like using trendlines and the MACD indicator will tell you when to enter or exit a trade.
Regardless of what technical trade analysis you use, Forex chart analysis is critical. Always find the trend using these 4 tips before entering a trade. Trying to trade against the trend is very difficult and too risky in my opinion.