Can I Use Monthly Charts to Trade Forex?

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Can I Use Monthly Charts to Trade Forex?

While most (if not all) retail traders do not trade off monthly charts, it pays to keep an eye on them for the major trends. Only those with deep pockets or those who do not use leverage can ignore the noise and have the staying power to trade off these longer term charts. .

I recall some old time commodity traders who traded off the 4 week highs and lows. A firm close above a 4 week high would trigger a long position and a close below the 4 week low would trigger a short. I could not imagine then or now following that system but shows how monthly charts can be used although I prefer to use them as a starting point to view the longer-term trends.’

Let’s take a look at the monthly currency trends coming into the new year.

EURUSD: 4 red candles (4 months) down in a row. With a new low set already in January, a move above  of the prior monthly high would be needed to break the pattern.

USDJPY: Less smooth move up with 3 out of 4 green candles…. to accelerate the upside, the high (red arrow) would need to be taken out.

GBPUSD: 4 down red candles (months) in a row and approaching several layers of potentia support. Similar to EURUSD, with a new low set  already in January, a move above  of the prior monthly high would be needed to break the pattern.

USDCAD 5  green (up) candles in a row but would need to decisively move above last month’s high to suggest an acceleration of the uptrend.

AUDUSD: 3 red down candles but yet to take out last month’s high. To suggest a change in direction, the prior mont’s high would need to be taken out. Otherwise watch for a new low or just an inside month.

USDCHF; 4 green up candles in a row but faces layers of resistance, especially the one with a red arrow. A break of these levels would accelerate the trend. SimIlar to EURUSD and GBPUSD, with a new high set  already in January, a move above  of the prior monthly high would be needed to break the pattern…. Addendun January 10…AUDUSD joined the downtrend party by breaking its key low.

So, as you can see, the monthly forex chartsa give a broader perspective as what it would take to extend or break a broader trend.  It also shows major support or resistance levels. The big players who do not have the flexibility to quickly turn positions tend to focus on longer-term charts (e.g. 4 hour to monthly) to guide their trading decisions.

Can I Use Monthly Charts to Trade Forex?

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