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After all we’ve learned about analysis tools, probably the best way that they can serve us is to combine them. Combining Indicators, chart patterns and candlestick formation will give you higher chance of profitable trades. When combining tool you feel more confident in your analysis. You are safe in your trades, when you know that they are with high percent chance of probability. When combining tools you’ll get that chance.
When you are combing tools, your analysis will become more precise and with low risk, that means that you’ll minimize your loss and maximize your profit. We recommend combing analyzing for great success.
Here is an example of combined strategy, we’ll describe what we’ve done:
At 1h charts on EUR/USD we have formed high on 2011.06.07 22:00 GMT. Price reached new high but that new high was not followed by MACD. There is an obvious divergence. This divergence give us a signal that there is possible reverse, so we wait to see what price will do. Several bars didn’t break the high, and MACD cross zero line, that is second signal that something is about to happened. On 2011.06.08 19:00 GMT 20 period MA crossed 50 period MA that is a bearish signal. The day closed with tweezers tops on daily charts, that is reversal signal. Price felt down but found some support and rebounded from that level. On 2011.06.08 9:00 GMT price found heavy resistance and did not make new high. We consider that a Head and Shoulders was building, breaking neck line will confirmed our suspicion.
We place sell order at neck line. After 5 bars price broke neck line and we went short. We could short 2-3 pips after the right shoulder but to be more sure we wait for break. Our position has great profit, but why. MACD was in divergence, we have MAs crossover and reversal candle at daily basis and Head and Shoulders in progress. We had great confidence in our analysis and market prove to us that we were right.
You see when you combined tools you have great chance of profitable trades.