APPLYING TECHNICAL ANALYSIS

Charts can be used on an intraday basis (5-minute, 15 minute, hourly), weekly, or monthly basis. The chart you study depends on how long you plan on holding a position. If you are trading with a few hours in mind you may want to look at 5-minute or 15-minute charts. If you plan on holding a position for a couple of days, you may want to look at an hourly, 4-hour or daily chart. Weekly charts and monthly charts compress price movements to allow for much longer-range trend analysis. Therefore, these charts give the technical trader a longer-term context in which to conduct trades.

Test Your Skills

Look at the 5-minute, 15-minute, and one-hour charts and find support and resistance lines for the EUR/USD. You will notice that once a major support or resistance line is broken, markets tend to trend strongly in that direction.