When you are analysing chart from a trade perspective, you must look from 2-3 important aspects

Once you have these three pieces identified, what left is just placing the trade.

Let us take a look at an example -

1. As you can see market is in a bullish trend.
2. The market, in the trend, retraces and forms a low at Red Elipse (A)
3. It then resumes the uptrend again followed by again a retracement.

If you look at 2nd retracement, the elipse B, it is formed at 38.2% Fib level. Also, this point is also forms a double bottom since the low at Elipse A
is also at the same level.

So, definitely, this looks to be a strong support area.

So, the probability of market bouncing off from this support area is very high.

So, in elipse B, The 1st candle (red breaches the 38.2 level, but the next candle (Blue candle) pulls back and shows that the retracement level holds good.

What this level of analysis done, let us look at the 3 aspects we covered at the beginning of this post -

1. The entry point for the Forex Trade- Ofcourse it is when the market bounces off from 38.2 fib level. But the entry should only be done when it is confirmed that currency pair has bounced off..which is at the CLOSE of Blue Candle

2. The immediate target - The level C as shown by a green line. This is the immediate target. If currency pair still shows enough strength, then continue to keep the trade open

3. The stop loss - Could have been placed below 50% fib level. A more conservative approach could have been to have it below the 61.8 level. But that wouldn't have been
good from Risk Reward ratio perspective

See folks, you don't have to use any complex systems to analyse the market. All you need is 2-3 good forex indicators.

In the above analysis, we just used Support/Resistance lines (Fibonacci levels and double bottom/top levels) and Candlestick.

Ideally I would have recommended you to use another confirming indicatort like RSI/MACD etc. But, to keep things easy to understand, I just included S/R and
Candlesticks.

Let me know your comments about this post

Oh, by the way, if you are interested in learning Forex Candlesticks to become even better trader, then check out -