Over the last several months I have been trading mainly the EURUSD. In order to know how to properly enter a trade Long or Short I do a top down analysis. In performing my top down analysis I start with the monthly chart, then move to the weekly chart, then the daily chart, then the 4 hour chart, then the one hour chart, then the 15 minute chart, and finally the 1 minute chart which is the time frame I trade. In this series of analysis I will try to show how I do this. Please stay with me as I describe this detailed analysis as it may take a day or two for me to complete but I will try to do all the analysis today. Some traders may think that I am over doing my analysis but that is their own opinion. Each trader must do their own analysis and this is how I do mine.
Looking at the monthly chart the first thing I do is to identify horizontal support and resistance lines. To do this I look for a price level that the currency pair has a problem crossing. I have shown these with the red circles. Going forward in time it may be quite awhile before price encounters the horizontal support and resistance lines I have drawn but when they do it could mean that a major change in trend could transpire. In addition, since 2017 it looks to me that price is making a series of lower highs and higher lows so I have also drawn support and resistance lines (blue) to show the current boundary lines in which price has been trading. It now looks like price is approaching the blue upward sloping support line. I will be looking for price to reverse directions next month (March) and start moving higher. A clear breakdown below this upward sloping support line will indicate the downward trend is continuing.
Looking at the monthly chart the first thing I do is to identify horizontal support and resistance lines. To do this I look for a price level that the currency pair has a problem crossing. I have shown these with the red circles. Going forward in time it may be quite awhile before price encounters the horizontal support and resistance lines I have drawn but when they do it could mean that a major change in trend could transpire. In addition, since 2017 it looks to me that price is making a series of lower highs and higher lows so I have also drawn support and resistance lines (blue) to show the current boundary lines in which price has been trading. It now looks like price is approaching the blue upward sloping support line. I will be looking for price to reverse directions next month (March) and start moving higher. A clear breakdown below this upward sloping support line will indicate the downward trend is continuing.