Trading the Weekly Timeframe

Filed under: Learn Forex Trading |

 

Trading the weekly timeframe is a little bit too slow moving for most people, myself included. However, if you keep an eye on the weekly timeframe, you can pick up one or too very high probability trades. This takes very little time, and requires only a quick check once per week when the weekly candles close.

 

Figure 1.

By way of an example, I want to show you a setup on the XAU/USD forex pair, which is the exchange rate for gold. Figure 1 shows the pair viewed on the weekly timeframe. What you can see is that price had formed a nice bottom or support area, which had been respected on a couple of occasions. So when price hit this level for a third time and formed a very nicely defined pin bar, we could have thought about taking a trade here. We could have put an order in to go long at a 50% retracement of the pin bar, with a stop loss just a few pips below the low of the pin bar, and a target of two times our risk.

 

As you can see, if we had put this order in, the order would have been filled. Price would have come close to our stop loss, but it would not have taken it out. Instead, two more pin bars were formed, before price started to move up. Our target would have been met for a very nice 2% rise on our bank. However, our capital would have been tied up for a few weeks, which is the downside to trading on the weekly charts.

 

In summary, if you traded exclusively from the weekly charts, then your trading would be very slow moving indeed. However, if you use them to get one or two extra trades per quarter, then it can be a useful bonus. The setups are high probability and the spread become negligible. Thus, the weekly charts are well worth taking a look once every week.

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