If we scroll over to the far left of the price chart, we can see that the price action was beginning to consolidate. We can see the resistance level that formed within this minor consolidation phase. At this point, we will watch the price action closely and see if we can spot a strong breakout from this level to the upside. More specifically, we want a bullish Marubozu candle to be the breakout candle to the upside. Remember, a bullish Marubozu candle is simply a price bar that opens at the lower end of the range, and closes at the upper end of the range.

Soon after prices began to move higher towards the resistance level, we can spot a strong, wide range bar that closes above the resistance level. In fact, this breakout bar is a bullish Marubozu candlestick, which validates our long set up in this case. But keep in mind, that this event only serves to confirm that a potential long opportunity exists. Price will need to pull back to this level for an actual long trade to be initiated.

Following the bullish breakout, we can say that prices continued higher for several more bars, before subsiding and beginning a consolidation phase again. As the prices were consolidating in a downward motion, it eventually reached the original breakout point.

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You can see where that occurred by referring to the candle within the green circle. It is considered a bullish hammer formation, also called a bullish pinbar formation. Now that the price has touched the old resistance as new support, we will use that candle as our potential long signal bar. Keep in mind, that we will need to wait for the price to move at least one PIP above this specific candle to trigger our long entry signal. The bar following the hammer candle did meet this requirement which would have triggered our long entry.

The stop loss would be placed just below the low of the hammer candle here, which again is the candle that was the first to touch the old resistance level as new support.

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Our take profit level will be based on a two to one risk to reward ratio. If you refer to the far right of the price chart, you can see the vertical brackets that serve as our measuring technique for the target. The initial part of our analysis will require us to locate and plot a horizontal support level. Notice the two swing lows at the left side of the price chart which we have used as the reference point for plotting the horizontal support line.

The prices were trading within a well-defined range leading up to the downside break out below the support level. We can confirm that this breakout bar is a bearish Marubozu candlestick pattern. Although, we can see a small minor wick at the lower end of the candlestick, it is, nevertheless considered a viable bearish Marubozu candlestick for practical purposes.

Now all we have to do is to wait for a pullback to this prior support level which should act as new resistance. A few bars following the bearish breakout, prices began to pull back to the old breakout level. The price touched the now new resistance, and penetrated above the area slightly.

You will find the candlestick that serves as our signal bar circled in green. As soon as price moves one pip below the low of this candlestick, we will want to initiate a short position in the market. The third bar following the signal bar would have triggered our short entry. You can see that candlestick marked as Entry on the price chart.

The stoploss would be placed above the high of the signal bar as can be seen by the black dashed line above the Entry. The target for this trade would be reached upon the price achieving a 2 to 1 reward to risk measurement. The 2X RVR target is shown with the green dashed line near the bottom of the price chart.

Is it possible to make a living by scalping the Forex market? This is a question that many new traders who enter FX trading often asked themselves. The answer to this question is not always cut and dry.

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That is to say that there are traders that are making consistent profits by scalping the FX market, however, there are many more that have attempted it, and eventually burn out or burn through their account. There are several reasons why scalping for a living has its challenges.

Firstly, due to the relatively high transaction cost associated with very short-term trading, there is a bigger hurdle to overcome before you can see net positive results. To illustrate this with a simple example, compare the swing trader will often have a target of pips, versus a scalper who might only be targeting 10 pips of profit. A second disadvantage that a scalper faces is the viability of trade setups at the very small time frequencies. Meaning that, trade setups that occur on higher time frames tend to be much more reliable than those that occur on smaller timescales such as the one minute, three minute or five minute bars.

With the long entry, you must wait for the 3EMA to cross above the 18 Bollinger bands middle line. Conversely, to make a short entry, you need to wait for the 3EMA to cross below the 18 Bollinger bands middle line.

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You should place your stop loss about 4 pips on either side of the Bollinger bands middle line. This is a simple but very effective trading technique. The best way to identify scalping opportunities is to use indicators that illustrate a price movement taking place in real time.

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Additionally, traders should use indicators only on charts with a short time frame, such as a minute chart that considers only the latest data. Within this short time frame, a scalper can open a position after the price drops and the stochastic enters oversold territory, and then cash out their position after the swift price increase.

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The entire position needs to be open for a total of only seven or eight minutes. For those who find the idea of holding lengthy positions uninspiring, however, forex scalping will surely hold more interest. Scalping can appear basic and almost effortless on the surface, even if the reality is significantly different. When scalping, there is minimal room for error, which means it is perfect for those who are able to exhibit high levels of concentration in short bursts. Scalping is fast-paced, volume-orientated, and—at times—unforgiving.

It presents a way of trading that can be reactionary and will often call on a trader to roll with the punches. If you meet the criteria and have the concentration levels that allow you to trade in short, focused bursts, then scalping could be the missing link in your forex trading efforts. The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

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