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Learn Forex: Scalping Short Term Market Momentum
Article Summary: The EURJPY has advanced 327 pips from the November 21st open. As December trading begins, short term market momentum can be used to identify fresh scalping opportunities.
Trading a scalping strategy in the Forex market first requires traders to find and identify short term market momentum. Regardless of the strategy we ultimately end up executing, it is always imperative to have a trading bias to determine if we are looking to buy or sell a currency pair prior to moving in on a shorter term graph. Today we will review the ongoing EURJPY trend uptrend and see if there is an opportunity for continued upside momentum.
The EURJPY has been on our radar for some time now and was recently discussed in our previous discussion on market momentum. Since this point the pair has advanced as much as 327 Pips from the November 21st market open. With price now attempting to breach previous highs we will turn to our Building Blocks to find the key points in short term momentum in order to find scalping opportunities.
Learn Forex – EURJPY 4Hour Trend
(Created using FXCM’s Marketscope 2.0 charts)
EURJPY Building Blocks
Pictured below we can see our current Building Blocks, outlining market momentum using the EURJPY 30 minute graph. The analysis for Block 1 began on Wednesday November 28th. Shortly after this point the market printed its standing low for Block 1 at 105.26. From this point the market slowly advanced confirming market momentum to the upside by printing a Block 1 high at 107.65.
Strong trends must have price in both Building Blocks heading in the same direction. Currently the December 2012 low on the EURJPY resides inside of Block 2 at 106.84, however this low is higher than the previous low in Block 1. Also price has showed continued momentum printing higher highs all the way through the close of our analysis on December 5th. These market movements are indicative of a strong short term trend.
Learn Forex – EURJPY Building Blocks
(Created using FXCM’s Marketscope 2.0 charts)
With market momentum in both Building Blocks remaining higher, the short term trend for the EURJPY remains upward. With momentum identified scalpers may look to buy the EURJPY on future market advances. Alternative scenarios include a breakout under the Block 2 support, residing at its low at 106.84. A move below this point would conclude our running uptrend and at least temporarily change the trading bias on the EURJPY.
---Written by Walker England, Trading Instructor
To contact Walker, email WEngland@FXCM.com . Follow me on Twitter at @WEnglandFX.
To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to WEngland@FXCM.com .
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