Currency Trading Buy and Sell Zones
When currency trading online in the forex market it’s helpful to understand where the buy and sell zones are. Along with trading trends and trendlines, this helps you as a forex trader to identify potentially profitable forex trades.
Buy and sell zones, generally speaking, exist when a trend has been broken in currency trading. To identify and trade buy and sell zones, then, you must be able to identify a trendline break.
The Broken Uptrend
Remember that the trend is your friend until it bends when trading forex online. That is, if you are in the currency trading market trading a trend, then it is your friend until it bends. Bends can also be your friend, however, if you learn to spot them and learn how to trade the trendline break (entering in the buy or sell zone).
An uptrend is considered broken if the following conditions are met:
1.The market makes a new high.
2.The market first penetrates the trendline.
3.The market then retraces to the last level of support.
When the uptrend is broken, the currency trading market enters the sell zone, which is the area below the trendline. Remember, however, that the trend is only broken if the market has made a new high. You will see certain cases where the market pierces the trendline but does not break it when you are trading forex online.
To be a true trendline break the forex market must bend after it has made a new high.
Watch for this broken uptrend when you are trading forex online:
This trendline break can be used for currency trading online
Trading the Sell Zone
When currency trading the sell zone is one way to take advantage of an uptrend break. To trade the sell zone, wait until a complete bearish candle forms below the trendline (it must completely clear the trendline, wick and body). Notice the sell zone in the picture below:
The currency trading sell zone
Take care to wait until the candle has closed to call a trendline break; otherwise you may fall victim to a false spike. When the bearish candle appears in the sell zone according to the conditions stated above, place a market order to sell at the opening of the next candle (if equity management allows).
Set your stop loss order at the last level of resistance
Forex chart shot of a sell zone when trading forex online
Techniques which can be applied to up trends, can also be applied to downtrends. Tomorrow I will share with you another example of how you can apply this strategy to currency trading online in the forex market.
Related posts:
- Trading Currencies when the Downtrend Breaks
- Trends and Trendlines | Uptrend Examples
- Downtrend Examples | Lower Lows and Lower Highs
- The Tweezer Top Candlestick Pattern
- The Evening Star Candlestick Formation
Tags: buy zone, currency trading, forex chart, sell zone, trading forex online, trendline, trendline break, uptrend Posted in
Rapid Forex on 
Philile on 
Gary Cooper on
March 8th, 2010 at 6:54 pm
“the market makes a new high” in how many time intervals?
what intervals are you using in your examples/trading?
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Rapid Forex
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March 8th, 2010 at 7:20 pm
Thanks for posting excellent questions Duncan. I appreciate you taking the time to want to understand these concepts. I want you to benefit from this stuff, so please keep asking questions if there is anything you need to know.
Q: “the market makes a new high” in how many time intervals?
A: I believe what you are asking was explained in the recent support and resistance post. This is where the concept of highs and lows are defined. I’ve also updated the currency trading buy and sell zone post to include links to these other related posts within the text.
Q: what intervals are you using in your examples/trading?
A: so far these examples aren’t using any time frames, it’s merely here to explain the theory. These concepts can be applied to any time intervals. I will be including specific examples for various different time frames in up coming blog posts. Over the next week or so I’m just getting the background concepts on the blog so I can link to them when people ask questions.
I hope this answers your question. If it doesn’t, please try asking in a different way and I’ll try my best to explain in a way that you can understand.
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March 13th, 2010 at 4:48 pm
That’s what I’m talking about! Buying and selling are how we can make some money. I printed this post out and I’m gonna study it overnight.
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March 28th, 2010 at 12:47 am
Wouldn’t it be more logical to look for a LOWER high after the trendline break before deciding there is a reversal? You sort of do this by waiting for the last support level to be broken. If you look at more examples, I’m sure you will see that the lower high is a valuable signal. Your stop-loss would then be just above this lower high.
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April 20th, 2010 at 5:14 am
Brian – I hope you’re enjoying your nomadic life!
Here’s something that’s been bugging me. Your approach is to check the fundamentals (i.e. check that there isn’t some major news that will affect the market) and then apply technical analysis to drive your trading. Why not have a robot do the second part? In other words, why not first check that world news isn’t going to be a factor for a given day and then unleash a robot to trade for that day. If the technical analysis is as mechanical as it seems, surely a robot would do that part better, faster, and more accurately than a human.
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Rapid Forex
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April 20th, 2010 at 5:15 am
@Sol – that’s certainly one approach. I personally don’t believe in letting a robot trade for me. I think robots are great if used to signal alerts. I like to decide if the trade is good or not myself. But if you wanted to use a robot, just make sure you use good money management and see consistent profits. If you get that to work, then GO FOR IT (be sure to let me know
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April 24th, 2010 at 11:55 pm
Hi Brian
Regarding buy and sell zones lesson, today (Sunday 25 April, market has not opened yet) when I looked at EURUSD,on Daily chart the market seemed to bounce from the support, on 4hr chart it broke the inner trendline (that what I thought) and on 1hr chart it already formed the first upWave and now it seemed to be in Tradezone point III to IV and may be retrace to point V which probably around 1.3345 and if it bounces from here I can look for entry if it bounces from this point and set profit limit at point VI which around resistance at 1.34200
I am confused what timeframe we are looking for entry and exit. I guess I have to be patient and wait for all lessons when you put things together.
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April 26th, 2010 at 8:50 am
@Kuvaldi: You have to be VERY careful about setting your profit target and stops when you look for the bounce from #5 to #6. You’ll see from the following discussion that taking the move from #3 to #4 is much safer.
Look back from the low on the 1H chart on 4/23 1.3201 and mark as Brian’s #1. The high at 1.3345 is #2 and it curls down from there to #3 1.3268. #4 high is 1.3399, and #5 is 1.3332 on 4/26.
Now look at the 4H. See how it makes a #1 to #2 from the low of 1.3201 to the high of 1.3399? That matches exactly to the 1H making its #1 to #2 to #3 to #4 movement. Notice how the 1H has an up move, then a curl down, then another up move. That curl down happened while the 4H is still traveling from its #1 to #2! This is the NATURAL MOVEMENT that occurs! We know that the 4H will make a curl down from #2 to a #3 point. So to do that, the 1H MUST move down significantly. So, the curl down from #4 to #5 brings it to a CRITICAL POINT as it starts the curl down on the 4H: moving up from #5 to #6 will either take it up beyond #4 and interrupt the 4H in its down move, or else the 1H will move up from #5 to #6 and #6 will be a lower high than the high at #4. This is the way it typicallly it happens, and you see that is exactly what happend here!
The 1H moved down from a #6 that is a lower high than #4 all the way to 1.3291, and we see this turns out to be #3 on the 4H.
Look closely at the 4H after #2 high, and you can see the candles start coming down, but then there is candle that moves up, then it resumes moving down to #3 low. Isn’t that exactly matching the 1H moves of #4 down to #5, #5 up to #6, then #6 down to #7? See how monitoring two charts together gives you much more information about the moves than looking at just one chart?
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April 26th, 2010 at 3:02 pm
Hi Regit
Thanks so much for your comment.
Could you please tell me your tip what would you do in this case?
How would you set up the entry and profit target in this case? What is your methodology?
What I did was I entered on 1hr chart at #3 and used 4hr chart for my profit target at 1.342.and then today it could not reach my target and seem to heading down.
Thanks.
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April 26th, 2010 at 4:42 pm
Hi Regit
I just reviewed your comment again. Thanks for sharing this with me.
I think what I should do is, have daily chart for my overall direction, 4hr chart as my setup chart and have 1 hr chart as my timing for enter and exit.
In this case I should buy at #3 then exit at #4 on 1hr chart then get in again at #7 then exit at #8 around 1.3400 by using 4hr chart as a comfirmation chart and trade only within 3 wave of 4 hr chart if the market still makes up wave more than 1 and 2 wave. Please correct if I misunderstood.
And anyone please feel free to comment.
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April 27th, 2010 at 8:43 am
@Kuvaldee–Really, I don’t want to hi-jack Brian’s presentation, so I’ll make anoother comment and then leave it to him if he wants to see this discussion continue.
Hmmm, I thought I already gave you the tip in the previous post: “So, the curl down from #4 to #5 brings it to a CRITICAL POINT as it starts the curl down on the 4H: moving up from #5 to #6 will either take it up beyond #4 and interrupt the 4H in its down move, or else the 1H will move up from #5 to #6 and #6 will be a lower high than the high at #4. This is the way it typicallly it happens…”
Look at the CRITICAL POINT and let the market itself SHOW you EXACTLY which way it is going. You are not guessing nor looking for high probability patterns to show up, you are waiting for the market itself to SHOW you what it is doing and then go in that direction.
Yes, you can in advance set a TP just in case the market continues up to new highs on the #5 to #6 move on the 1H chart. You can buy if it breaks that high at #4. But as I said, that is NOT the natural movement of the market. The natural movement is to END the up move (by #6 being a lower high than #4, as I mentioned happened here) and begin a new down move. An extended up move beyond the #4 high is just a bonus for you as a result of the buyers being a bit over excited (for whatever reason) and DELAYING THE INEVITABLE move back down.
Personally, I never try to take a trade on these extensions, but rather move to a bigger chart.
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Rapid Forex
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April 27th, 2010 at 9:39 am
@Regit – feel free to share your wisdom. I don’t mind at all. I appreciate you taking the time to help & I enjoy reading your comments. The Forex Sailing rules that I posted today take what you’re saying into account. Others may not fully understand this until I share a bunch of examples. There are some nuances to looking at trading this way, but I’m providing a simple framework for people before getting into all the “special cases.” Once people look at the basic rules I’m providing, they’ll probably notice times when things work differently. In May I’m going to be doing the 90 day bootcamp where we’ll look at all of these cases on an almost daily basis. I’ll also be sharing Forex Surfing, which works on shorter timeframes (still using fibonacci waves).
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June 7th, 2010 at 2:43 am
hi Brian,
sorry i’m new to your blog so i’m reading the older post now.
i fully agree with your logic on the buy / sell zones. just want to clarify one point.
for example, for sell zone, why do you emphasize that it should make a NEW HIGH then followed by trend line break?
surely for an uptrend to lose its momentum (then reverse) we should be looking for signs that it fails to make higher high and higher low, and therefore should look for lower high followed by lower Low. I learn the peak and trough concept years ago from Martin Pring.
Please correct me if my understanding is wrong.
thanks very much for sharing. You are doing a great job.
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Rapid Forex
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June 7th, 2010 at 12:36 pm
@Tony – this is a good point. This article was one that I had written a few years ago, it’s on the blog for educational purposes. You understand it correctly, I’ll have to revise this post in the future.
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