Why the Trend Really is Your Friend
By: Johnathon Fox
There is a very popular saying in the trading world “The trend is your friend”. Whilst you will hear a lot of traders spout these words, most don’t know why trading with the trend is so important, or how they can do it.
This quick article is going to cover some very simple Price Action trades that have formed lately that could have got you into the existing trend and given you a high reward and low risk trade.
You will notice all the setups I am about to cover are all on either the 4hr chart or daily chart. I have gone through in previous articles about the power of higher time frames and when combined with the trend you can really spot some highly probable setups.
The first trade we are going to cover is on the 4hr chart of the GBPCAD. The key to this trade was price was moving and trendy lower and then retraced higher. This strength in the market or rotation higher is what gave traders the chance to get into this trade at a value area.
To confirm the trade price formed a Bearish Engulfing Bar that traders could use to enter them in this trade with the trend.
GBPCAD 4HR CHART
The next trade we are going to cover is on the EURAUD 4hr chart. What was very powerful about this trade was that not only was it with the trend but it also pulled back to a very relevant resistance area. Traders were entered into this trade on the back of a Pin Bar reversal at this key area.
EURAUD 4HR CHART
The last chart is not a setup that has been and gone but a chart we can look at for potential setups in the near future. When analysing a chart and trying to look to trade with the trend we are also looking for key strategical areas to get into the trend. When trading we are always looking to buy low and sell high or sell high and buy low.
The chart below is the daily chart of the EURAUD. On this chart we can see the trend has been moving down heavily of late. We can also notice that price found minor support in the past two weeks and this is the area that if price can move back up to, could present with a good value area to get short with this trend in our favour.
EURAUD DAILY CHART