As price action traders, we tend to overlook the weekly time frame. This is a huge oversight. The weekly time frame can prove to be extremely advantageous when developing a directional bias for a particular market.
Have you ever wished there was a way to easily determine a market’s bias? That is, figure out which way a market is likely to move over the next several weeks or months.
No doubt having this kind of information at your fingertips could drastically improve your trading. No more guessing whether a market’s broader sentiment is bullish or bearish.
In this lesson, we’re going to discuss how to trade Forex using the weekly chart to help identify a directional bias. Think of it as trading a pattern within a pattern. This will result in greater confidence when placing your trades.
Price Action Patterns on the Weekly Time Frame
Price action patterns on the weekly time frame can be used to form a directional bias. Patterns such as the head and shoulders, double top and even the equidistant channel can all be used to formulate a “big picture” idea of a market’s probable future direction.
Take for example EURGBP. A glance at the weekly chart shows us a descending channel that has been forming for almost six years.
This not only gives us directional bias, but it also presents a future support area to watch for buyers.
From here, we can begin to drill down and look for selling opportunities on the daily and four-hour charts.
A look at the daily chart reveals a selling opportunity in the form of a wedge breakout. Now we not only have the confidence of this bearish pin bar at new resistance, but we also know that this market is in the downward leg of a broader descending channel.
By using the weekly time frame, we’re able to get a big picture look at what a particular market is doing. Combine this with price action setups on the lower time frames and you have a strong foundation for a definable edge.
Price Action Signals on the Weekly Time Frame
Just as we can use technical patterns on the weekly time frame, we can also use price action signals.
By “signals”, I’m referring to pin bars. However bullish and bearish engulfing bars can also provide clues about the probable future direction of a market.
Let’s take a look at how a weekly pin bar can indicate a possible turning point in a market.
In the chart above, we have a bullish pin bar that formed on the USDJPY weekly chart. This pin bar formed at a previous resistance level, which is now acting as support.
This price action signal tells us that the market is likely to see higher ground in the weeks ahead. But instead of trading the weekly time frame, we can move to the daily chart and watch for bullish price action.
Here we have a bullish pin bar that formed on the USDJPY daily chart after the market was able to hold a key level. This bullish signal occurred just one week after the weekly pin bar formed in the first chart, giving us a clear signal to go long.
In fact, this bullish pin bar was discussed at length inside the members-only price action community.
Successfully navigating the Forex market is all about clues. The more clues you can put together about a market’s probable future direction, the better your odds of success.
The weekly time frame can be a great asset for the Forex trader if used properly. Just like the daily and four hour charts, the weekly time frame produces price action signals and patterns. These signals and patterns can be used as a guide to help steer your trades in the right direction.
So before placing your next trade, be sure to take a look at the weekly time frame, it might just be the difference between a winning trade and a losing one.
What are your thoughts about using the weekly time frame to develop a directional bias? Do you currently use something similar?
Leave your questions or comments below. I look forward to hearing from you.