Technical Analysis (9) Fulcrums - Charts time frames

 technical analysis


Fulcrums

One of the most useful tools in the arsenal of forex traders, is the Fulcrum Calculator. is considered one It is one of the most used tools in determining trading strategies.

In short, the fulcrums are located where the market is expected to reverse. If the market was swinging down, then the pivot point is the tie or the value at which the market will reverse itself and begin to swing Alas. Similarly, if the market is swinging upward, we find that the fulcrum is the link or the value at which it starts. The price is swinging down. The skill of forecasting the major turning points of the market is one of the most important skills. Which helps you to decide when and where to enter or exit the market.

Initially used Fulcrums are popular to be used by the trader in carving out his strategy. In the stock markets, it allowed traders to determine the direction of the market, with limited information and calculations. you can be Forecasting the pivot points using the prices of the high, the low, the opening, and the closing of the previous day. and benefit The pivot point is also in predicting when the market will fall. And if you use it with resistance and support levels you can Estimation of the time range for the continuation of the trend.

There are several ways to get to the pivot points every day, but the easiest way is: to use the higher average price and the lowest, the opening and closing prices of the previous trading day, and divide the average of the four prices by 3.

fulcrum

The previous day's high + the previous day's low + the previous day's close, and we divide the sum by 3.

Resistance

(2) Multiplying the pivot) - Decrease.

the support

(2 times the pivot) - height


Example: If the EUR/USD prices were on February 3, 2022, as follows:

Close: 8357.0, high: 8418.0, low: 8316.0.

Therefore, the fulcrum values for February 4, 2022, will be as follows:

Pivot = 8364.0, Resistance = 8412.0, Support = 8310.0

Note: If the market opening price is above the fulcrum, this dictates a strategy of long positions (buying), even if The closing price is below the pivot point, dictating a short position strategy.


The fulcrum of the breakout of the deal

Since the investors were able to calculate the pivot points, and the levels of support and resistance, using the information of the previous day. Accordingly, they can place orders to enter any of the support and resistance levels, in the event of a breach.


Charts time frames


There are many options that the trader can choose from in relation to the time frame of the chart,
There is a drawing with a frame: 1 to 5 minutes; And from one to two hours, to 4 hours, and there is a longer frame On a weekly or monthly basis. From that, you choose what brings you the essential benefit of your trading plan. So let's start at Learn about time frames, and what they can provide for you.

Position traders/or long-term traders

Here, traders resort to the weekly or daily chart. Weekly frame graphics provide a longer outlook
and knowledge of the general trend. The day-to-day graphics help to place entry orders. Traders
Users of these graphics, they use for periods ranging from weeks to months and years.


Advantages

the market does not need to monitor.
Lower transaction costs, due to fewer traders.

Defects

Requires bigger stops, or too much risk capital to withstand big failures.
It requires patience, as a good trader comes only a few times during the year.

Short Term Swingers/Swinging Swingers

Here traders use charts with time frames calculated by the hour, or by several hours to calculate
per week.

Advantages

It provides you with more trading opportunities, compared to charts with larger time frames.
It is suitable for most traders, as it is a compromise between very long-term traders, who may have isolated themselves from the Market movements, and very short-term traders, who get obsessed with any market movement.


Defects

Transaction costs are higher, compared to long-term trading.
Nighttime risk becomes a factor in this time frame.

Daily speculator/or intraday speculator

Traders use short time term trading strategies and resort to hourly charts. or exact. They also trade during the entire trading day and get out of the market before the close.

Advantages

Offers many trading opportunities.
No risk in holding on to the pair during the night.

Defects

High transaction expense, due to the presence of more traders, compared to other time frames.
Mentally exhausting, given its short time span.

Note: While deciding which graphs to follow, you also need to keep in mind the volume of
risk on the capital available for your trade, as longer time frames, require additional risk capital than
Lowest time frame risk capital.

Examples of time range graphs

Here we'll show you what different price movements look like depending on the time frame you're looking at.
If you follow the movements of currency pairs in different time frames, you will see that the market is able to swing in different directions. different at the same time. For example, you might see that the moving averages are rising on the weekly chart, and give you
A buy signal, while at the same time on the daily chart, is descending giving a sell signal. In addition, the trader can I would say they are long for the EUR/USD based on the daily chart, but you also
He is able to enter short positions based on the hourly chart. Like a quantum, one can be right.
In several ways, depending on your view of it. and useful.

Now, we're not showing you that to confuse you, but to show you that you can draw something.
This also determines whether you are aware of a dominant trend that may influence your trading decisions.

Example of a graph of the movements of a currency pair on a 5-minute time frame

Below you will find a 5-minute time frame chart of the EUR/USD pair, the pair's trading halted above the simple moving average. 100, indicating that the market is buoyant.




Chart showing the movements of a currency pair on a 60-minute time frame

Looking at the same currency pair in a 5-minute chart, you can see the long-term trend was actually down, The liquidation of prices continued.


4 hour time frame chart

We are still looking at the same EUR/USD chart, but on a longer time frame. You see that there
Fresh movement on the road, we may have just needed to withdraw.


Example of a daily chart

And finally, looking at a larger time frame, we'll notice that we were wrong again, and in fact, there is a low move In the very long term, prices will continue to fall.



As we can see all the graphs show the same scenario, but in different time frames, they also give conflicting signals. We put this simply to show you the importance of choosing the right time frame, and to know that a good trader should notice the range The longest period of time before making a trading decision.


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