Forex Setups For Swing Trades

This illustrated article explains how to locate forex setups for swing trades using multiple time frame analysis. This chart setup method provides low risk high reward chart setups for trading in the direction of the primary trend, and this chart setup method works on all 28 pairs we follow.

What Is A Forex Chart Setup

Forex setups for swing trades is when a currency pair is in an uptrend, then moves strong against its trend for a couple of days, enabling a trader to buy the pair at a lower price while still trading in the direction of the trend. Similarly, when a currency pair is in a downtrend, then the pair moves up strong against its trend for a couple of days, enabling the trader to sell the pair at a higher price while still trading in the direction of the trend. Either situation is a forex setup on the charts, as the pairs are “setting up” for moves back into the trend.
When the charts set up this way, traders can enter the trade at a much better price while still trading in the direction of the trend. This lesson is not too difficult to understand but is valuable, and works very well in trending markets. This same trading technique also works, and is widely used for trading other asset classes and markets including stocks, indexes, and commodities.
To determine the major trend and the forex setup on the charts on the smaller time frames, traders will need a set of trend indicators. Traders can use our free forex trend indicators for multiple time frame analysis, and set them up on their trading platform.

Forex Trade Setup For An Uptrend

Look for a currency pair that is in a pretty strong intermediate or long term uptrend but cycled down for a couple of days. When a currency pair cycles down against the major uptrend, it is “setting up” for a trade back in the direction of the trend. We refer to this as a “forex setup”, “trade setup” or “swing trade setup”.
Look at the example below:
If a currency pair is trending up on the D1 time frame, for example, then the M30 time frame cycles down, then you can enter the trade when the M30 time frame reverses back into the trend going up. Second example: If a currency pair is trending up on the W1 time frame, for example, then the H4 time frame cycles down, then you can enter the trade when the H4 time frame reverses back into the trend going up. When the pair cycles down, then reverses back up, the reversal point support level is called a “relative low” and your initial stop order goes right below it.
Forex Setups For Swing Trades
Traders can intercept the reversal point and subsequent movement back into the trend several ways. One way is to set an audible forex price alert to monitor the pair, another ways is to monitor our real time trade entry tool. Traders can also monitor the forex news calendar. Example: If the NZD/USD is in an uptrend but cycles down and forms a relative low, you can check the world economic news calendar for NZD or USD news drivers, then if the NZD strengthens or if the USD weakens, you can buy the NZD/USD as it reverses back up into the trend.
This forex setup method results in more confident entries, better stop placement, and excellent risk versus reward ratio. This chart situation occurs relatively frequently across all 28 pairs we monitor, especially in trending markets. This is a safe forex trading methodology that is applicable to all financial markets, that should tell you how well it works. The overall pip potential could be lower if you are deeper into the trend on the higher time frame.

Forex Trade Setup For A Downtrend

Look for a currency pair that is in a pretty strong intermediate or long term downtrend but has cycled up for a couple of days. When a currency pair cycles up against the major downtrend, it is “setting up” for a trade back down in the direction of the trend. We refer to this as a “trade setup” or “swing trade setup”.
Look at the example below:
If a currency pair is trending down on the D1 time frame, for example, then the M30 time frame cycles back up, then you can enter the trade when the M30 time frame reverses back down into the trend. Second example: If a currency pair is trending down on the W1 time frame, for example, then the H4 time frame cycles back up, then you can enter the trade when the H4 time frame reverses back into the trend going down. When the pair cycles up, then reverses back down, the reversal point support level is called a “relative high” and your initial stop order goes right above the relative high.
Forex Trade Setups
Conclusions About Forex Setups – Waiting for a currency pair to cycle against the trend and trading the relative lows or highs is a very safe trading system for all markets including the currency market. It works for all 28 pairs we follow. In a trending market if you miss an entry into a strong trend wait for movement against the trend and you can still safely trade with the trend on the same pair using forex setups, but at a much better price. The risk to reward ratio on these types of trades is high, and favors the trader.