Don't Forget to Do Your FOREX Market Top Down Analysis

The coffee is fresh and hot and you’re settled into your favorite office chair with the computers humming and your preferred news station talking away behind you. 

What you do next could mean the difference between an average day trading the FOREX Market and an exceptional day… if you start your FOREX trading day like a pro…

If you normally trade the five or fifteen minute charts and never venture above the thirty minute, you’re missing something big.  Most professional FOREX traders, including the author to this blog, start their day doing at least three things when they hit the seat:

First, they do a top down analysis of the FOREX Market they intend to trade, that is, they look at the weekly, daily, four hour, hour, half hour charts and note the position of their favorite optimized FOREX Technical Indicators…

Second, they review the calendar for any scheduled news reports that could have an impact on the FOREX Market they will trade (I use http://www.forexfactory.com/ as one of the first I check), so that I’m always aware of the time prior to a big news report which can/will stall or rocket the FOREX Market; and that’s good to know;

Third, they look at the overnight news to see if anything is impacting the FOREX Markets at this time, such as terrorism, bank failures, and government unrest, which can all shock global FOREX currency relationships. (Think the ongoing Greek Banking and government debt problems.)

Once your top down analysis is complete, begin to identify your daily pivot points and identify your historical support and resistance for the day.  Some professional FOREX traders also take the last major move and display the Fibonacci Grid or use a Fibonacci Spiral on the FOREX Daily Technical Charts to see long term Support and Resistance before they start their FOREX Trading Day.

During the day, always be sure to check the higher time periods in the FOREX Market you are trading for support and resistance points that are building as well as the position of your favorite indicators for similar positions in all time periods.  This knowledge could foretell a major directional change in the FOREX Currency Pair you are trading and a position where you would not wish to try to fight against.  Consider that a very strong FOREX entry or exit signal is when your FOREX Technical Signals are showing a change in the FOREX Market on more than one time period above the period you are trading. 

Keep an eye out and capture more jingle for your pocket.