top of page

TOP AND DOWN ANAYLSIS

Forex traders Top Down investing prices move up and down based on supply and demand. Traders choose to trade their money into an economy that that have a positive outlook and strong growth potential. 

Seven steps to top and down analysis:

 

1. Monthly main range (no more than 1000 PI PS) Measure the range with arrow tool... clone and duplicate both sides in order to be prepared for downside/ upside momentum. (3 Ranges in total)

  • Add horizontal line onto arrows

  • Now add the thin rectangle strip (clone and apply to other key levels)

  • Add labels E.G: "Monthly key Support 1 0.79**"

 

2. Step down to weekly timeframe to plot on the 'weekly mid-range levels'

  • Use Fibonacci tool: Click from resistance (top) to support (bottom)

  • Draw a horizontal line at the 50% (0.5) level. (Remove Fib afterwards

  • Do this for all three monthly ranges whilst leaving these weekly key levels as they are (no horizontal strip)

  • Label the weekly mid range levels E.G: "Weekly mid-range resistance 0.96* * "

  • Check the moving average situation (crossed up, crossed down/ Bullish, bearish) label

3: Step down to the daily timeframe to plot on any key levels with the rectangle strip only. Remember to use the H4 chart in alignment with the daily for doing so.

  • Use horizontal thin strip for any daily/H4 key levels - change the colour if it helps.

  • If no key level can be seen, don't force it, then stick with the weekly and monthly until Price action presents one.

  • Check the moving average situation (crossed up, crossed down/ Bullish, bearish) label (weekly and daily in alignment)

4: Mark on the higher highs/ higher lows (if in uptrend) OR lower highs/ lower lows (if in downtrend) - daily/ h4 timeframe

  • Always think ahead if a new higher high/ lower low may be expected.

5: Apply Trend-lines onto the chart for assistance and a clearer picture in terms of how the market is trending.

  • Daily and weekly major lines assist in overall direction. Be aware of the 3rd trend line touch/ bounce + the trend-line break rules (weekly and daily)

  • H4 + H2 chart is for the application of counter trend lines. Apply these if possible once you have an idea of the overall trend direction. Trade the breakouts in the direction of the trend (moving average crossover and breakout work together)

6: Apply Fibonacci to the chart. Weekly + Daily Fibonacci act as a guide to di- rection. Don't worry if the C- Retracement has been missed; use the D exten- sion targets as a potential directional bias.

  • H4 + H2 Fibonacci is great for entries - Extra confidence is given when the D extension levels overlap any key weekly/monthly key levels serving as an addi- tional confluence.

  • Trade the Fibonacci with inside bars/counter trend line breaks + moving av- erage crossovers.

  • Remember that 78.6% fib acts as a stop loss level (not on daily/ weekly) IMPROVISE - a close above/below the 78.6% may invalidate the A,B,C,D move.

7: A key entry strategy is the inside bar setup.

IMPORTANT: monitor your currency pairs, read the candlesticks and use all of the above to get the overall market direction/ bias.

  • Look for inside bars to assist in an entry once a solid trend direction has been established - possibly break down the best 2 setups across your currency pairs.

  • Daily/H4 inside bars hold the most reliability.

  • Follow the rules, highlight the inside bar, step down to the next timeframe, await M.A crossover then execute on the closing bar.

Tips:

-Remember to use daily/ H4 H.H-L.L-H.L-L.H AS STOP LOSS PLACEMENTS (safe places)
-No more than 2 trade running at any time
-Always fill out the trading spread sheet/log book and be honest with yourself -Think in terms of Percentage growth PIPS

-Always save work as neat as possible, annotate and keep organised.

1 1.jpg
bottom of page