How To Read A Forex Chart Part 2 | The Best Forex EA Bot

Alan Solosh here, the passive income guru, in this video tutorial explains to you how to read a forex chart.

Right? So I'm going to turn my phone sideways and I'm going to show you what insanity is, okay? So insanity is actually watching the prices going up and down, basically hoping for the best and hoping that, you know, the currency is going to turn around and you're going to get profitable. What is more important for you to do is rather learn what the chart is, how the chart operates, what the moving averages are so that you can prepare yourself rather than just flying blind and making emotional decisions, rather than educated them, decisions. So how we do this is we look at this from the longest period to the shortest period. So I've turned my phone sideways so that you can see the graph laid out in a much better pictorial for you, okay? So let's look at the month of what's happening with this, with this chart. So this is the Eurocad. And as you can see here, so each candle represents one month, okay? And as you can see here, the red candle is stopped on the white line. So that is what we call a level of support. Support means. So when you think of it, how you know the difference, there's two. There's two. The opposite of support is resistance. So how you know that you're on a. How you know the difference between the two is when you stand on the floor, the floor is supporting you. When you touch the ceiling, you can't go through the ceiling because the ceiling is resisting you from going through the ceiling. Okay? I hope that helps you to distinguish between the two differentials. So over here you can see that the, the graph, the candle is stopped on the white line. And it's very interesting to note, okay, that the candles follow these moving averages and they perform according to the moving averages. Now, the reason this is happening is because there are thousands, hundreds of thousands of traders out there, professional traders and novice traders, okay, intermediate traders, that are following the same principles, they watching the same videos on YouTube and they're setting up their charts using these moving averages, mainly the 200, the 34 and the 50. Okay? Now if that's happening and they following all these videos that are on YouTube and everybody's doing the same thing, then it would be obvious to say and to surmise that the currency will perform in specific ways. Nothing very complicated about it. So what's happening here is there are lots of buying and selling orders over here. So the public have basically people that are trading Forex. They've put Their orders in, some are saying that they want to buy the currency, some are saying that they want to sell the currency. So when you say you want to buy the currency, you basically betting that the currency is going to go up. Okay. When you sell the currency, you basically betting that the currency is going to go down. So over here there's lots of orders that are going off over here. Some people are buying, some people are selling. Okay? Now this is a very, very nice indicator at the bottom of the screen. It's called the stochastic and it basically tells you what, what's happening, what the sentiment is for that currency at the minute. So right now if it's above the 80, it means that that currency is pretty much overbought. Okay. And people are starting to get a little bit worried. So they start selling their positions, getting out of the currency until this, this line over here reaches below the 20. Then we're in an oversold position. And then when it comes up above the 20, we know that it's time to start buying. So right now we're in a sell position, okay? And we're waiting for the currency to go above the 20. When it goes above the 20, a lot of people will place their buying orders, get back into the currency and go long on that currency. Okay? This is mainly for swing traders, which means it's a long term trader that's going to be trading for a month, two months, three months at a time. So we can see here that the currency is being stopped on the white line. You can see that little tail over here of the currency has not gone through the white line. So we know that that is a point of support. Okay. If it hasn't gone through that line, it will not go to the yellow line. Okay? So let's look at the day chart and let's see what's happening with the day chart. So we haven't got any evidence of, of anything happening with the moving averages. But what we can look at is we can look at previous history of what's happened with this currency. So let's, let's draw a line on this chart, okay? And we're going to draw a line like over there, as you can see here, that is a point of support where the currency hasn't really gone that much. Okay. Underneath this line in a couple of instances on 18 May on, I'm not quite sure of the day there. So let's just see what the day was. There it is, it was the 31st of May. Then over there it's 30th of May and the 29th of May. So it's playing in this area and it hasn't really gone further down than this point. So the lowest point that, that the currency went was over there, but it's basically playing in this area over here. So that is your support here, is your resistance. If it breaks this line over here, we know that the currency is going to go bullish for a period of time. And if it breaks, if the currency breaks this line, we can just minimize it a little bit and we can see where the next point of, of support is in the next points of support where the currency could go. There's the currency at the moment it stopped over here. So the next point of support could be over here and the next support under that is over there. You can basically see where the currency is playing for those time periods. So it's playing in this area over here. You can see that it's on, on this line. So lots of, lots of movement over here on, on these lines. Okay, so if we take it one notch down to there, you can see that all the currency stopped at that specific point. Okay, so they stopped over there. Okay, and where am I looking? I'm looking over here and let's bring the line down a bit to there, to there. And you can see that it stopped over here. It has stopped over there and it stopped over there. So history repeats itself and you can pretty much rely on these statistics. So let's get rid of that, that line, let's go forwards and let's discuss more about what's going to happen with this currency. So as you can see, we've hit a point of support and this was Friday. Okay, It's Monday today and the currency has been in a bullish position the whole day. Okay, it's been up and down and up and down, but right now it's still, it's in a bullish position which means that we're expecting this currency because that, it's on that, on that level of support. We're expecting the currency to carry on going north. So let's look at another time frame which will be the four hour chart. Okay, so as you can see this was Friday. Over here was Friday and, and then today, sorry, this was Friday. Here's the line for Monday. This is Monday, the first four hours, second four hours, etc, etc, and this is where we are at the moment. And as you can see it's just starting to accelerate going in, in the upward position. But you can see what's happening and what lines? It's caught on. So it's caught between the blue line and the 8 exponential exponential moving average. So remember we've got two moving averages, two blue moving averages. We have got the light blue which is the five minute moving average or the five moving five period moving average. And then we have the, this one over here which is the 100 moving average. Okay. So if this candle breaks above the 8 exponential moving average, we can expect it to go to the white line. So let's look to see if this candle is held back by another moving average. And you'll see that there is a commonality there. So we're on the four hour chart. Let's go to the, the one hour chart. And as can see it's held up by the yellow line which is the move, the 34 moving average. So there lot and that is a quite an important moving average. There are a lot of professional traders out there using this moving average as a point of whether they should buy or whether they should sell. So right now if you look at the stochastic at the bottom of the screen, you'll see that we were in a position of oversold. Okay. Too many people were selling and now people, they're buying orders kicked in. And now the currency starting to go up. Okay. When it gets to above the 80 will be in an overbought position and then people will start selling that, that currency and it'll start coming down and hopefully there won't be too many selling orders. And this, this currency will carry on going north. Okay, so let's look at the 30 minute chart. So here's the 30 minute chart and this is very interesting over here. Let me show you why. So this is called a.

Head and shoulders. So with the people that follow the candlestick regime, you can see here's the head, here's a shoulder and here's a shoulder, okay. Now usually on the bottom side of a trend. So what I'm talking about is if you can see here the whole, the trend for the last week, okay, for this currency has been going south. Okay, now what the technical traders, people that analyze the chart using technical analysis, which is what we're doing, okay, they look for certain signals. So this signal is called a head and shoulders reversal, which means that we're expecting the currency to go in the opposite direction. Now we know that is because of this pattern that that is being shown. So we've got the head over here, shoulder over here and a shoulder over here and here the troughs. So the troughs are here okay. And so the troughs have not been able to go lower than this point. So let's draw a line. Do I have a line there? So let's just get a line. Okay. And there it is. So that's. That is the point of support. Okay. It's not really going lower than this. It's actually a little bit higher. It's about there. On the odd occasion. Okay. Very odd occasion, goes below there. But it's not really able to break through this line over here. Okay. On. On either of those occasions, on any of these occasions, that's where it seems to be stopped. So, yeah, we've got the head and shoulders. And now we're expecting the currency to go north. So why did it stop over there? It stopped there because it hit the Bollinger band. Okay. And there were obviously other orders at that level, okay. Saying that we want to sell the currency so that with more selling orders than buying orders. Okay. This is a supply and demand industry where there are more people wanting to do something than people wanting to do something else. Then the currency will behave in a certain manner. Okay. So over here you can see that there were more people that wanted to sell. Sell the. This currency. So they won and the price went down. Very simple. So let's look at the next. The next time frame, which is the 15 minute time frame. So on the 15 minute time frame, you can see now that we're very much in a bullish trend over here, but we have a level of resistance and that level of resistance is over there. So what did I say about resistance? It means that when you get to the top and the ceiling, you can't push through the ceiling. The ceiling is resisting you. So over here, here is that resistance over there. We'll just bring it down a little bit. So that's good. There we go. There we go. Let's bring it up a bit.

Okay. So that's basically it. And as you can see, that's the top of the candle and then the top of the wicks over yet hasn't been able to break that point. And we're waiting for more, more buyers, okay. Then sellers to come into the market and to. To correct this, this currency and to go more bullish than bearish. So over here, very important that we are above the 8 exponential moving average. This is key. So as long as the candles are above the 8 exponential moving average, we know that we're in a bullish trend. As soon as that candle goes and closes below this moving average and the next candle opens below this 8 exponential moving average, we know that the sentiment has changed and we've gone into a bearish, a bearish, a bearish market. So yeah, it's hitting the five. This is the five moving average. And here is another very important line. Remember it is the blue line, which is the MA100. So this is the close out of the last 100 candles on the 15 minute chart. It is a quite an important candle. Where is the 200? There's the 200. And that is another reason why, why we also getting stuck there. We're getting very close to the MA200. So there are lots of orders there. So this is a point of resistance over here, Right over here is a point of resistance. Hopefully we will, we'll get into a bullish position later on in the day. Okay, so now let's look at the next, the next moving average, which is the 15 minutes, sorry, the five minutes moving average. And you can see here, we've dipped below the eight, the eight moving exponential. Okay, if this, if a candle, the next candle opens below, we will then be in a bullish market, a bearish market again, where the currency is going to go down to probably come down to the white line. As you can see it. Candle hasn't managed to come all the way down. Got a little bit further down past the white. This is the Bollinger band, the middle of the Bollinger band. Okay. And then if it carries on going down, we'll come down to the red line and then hopefully we'll come back up again and go back into a bullish market. So let's look at the M1. Okay, and this is where we are. So we're again on the blue line. This is the Blue 100. It's the closeout of the last 100 moving.

100 candles on this time frame. And this is the M100. So you can see that there are lots of commonalities of why the graph, okay, the chart, the candles and the prices are behaving in a specific manner and not going through price points because they're being stopped on those moving averages. And everybody around the world is using those moving averages. So you can, you can bet on it with a fair amount of certainty that the currency is going to behave in a certain manner. So these moving averages are not lagging indicators, they are more predictive indicators and give you, you know, some, some information, predictive information that can tell you in advance of what the currency is going to do. So you can see here we are below the 8 exponential, okay. We stuck on the 100 moving average. And also to note we are stuck between here and here. So there is your point of, of resistance. Okay. We hope that it's going to be a point of support that if this candle over here doesn't break through this line and does not go past the, the 100 moving average, we have a fair amount of certainty that the currency is going to do this and carry on going in a northerly direction. If you look at the, the sentiment and the direction on the one minute chart, you can see that, that it is in, in a bullish trend right now. So we're hoping, as you can see over here, stopped on the blue line, this one stopped on the red line, which is your point. It was, if it came up to the top, it would have been a point of resistance. Now that it's coming down, we're hoping that that resistance becomes a point of support and the currency keeps on going north. Okay. So I hope that gives you a little bit of information and clarity and a little bit of sanity instead of just watching your prices over here moving up and down and freaking out. Okay. That you are a certain amount of percentage of your capital is involved in trades and you worried. Okay. Rather learn why the currency is performing the way it's performing, how to read the chart, your life will become a lot more easier. You'll be calmer, you'll understand the currency is going to react in a certain way and your account, your deficit will now go into more of a profit rather than losses. Okay. So I hope that you found this video interesting and educational. If you like this video, just mouse over this video. On the top left hand corner there's a subscribe button. If you're watching this on my, on my training website, it'll take you to YouTube. If you're watching this on YouTube, underneath the YouTube video is a subscribe icon. Just click on the subscribe icon. To the right of the icon is a bell icon. Click on the bell icon. Give me a thumbs up as well as leaving a comment in the comment section. Leave your bitcoin wallet address. Also, because I give away 0.05 of a Bitcoin every single Friday and you could be the lucky winner of that price. So good luck for that and I'll see you on the next video.