The essence of medium-term trading is determining where a
currency pair is likely to go over the next several hours or
days and constructing a trading strategy to exploit that view.
Medium-term traders typically pursue one of the following
overall approaches, with plenty of room to combine strategies:
Trading a view: Having a fundamental-based opinion on
which way a currency pair is likely to move. View trades
are typically based on prevailing market themes, like
interest rate expectations or economic growth trends.
View traders still need to be aware of technical levels as
part of an overall trading plan.
Trading the technicals: Basing your market outlook on
chart patterns, trend lines, support and resistance levels,
and momentum studies. Technical traders typically spot
a trade opportunity on their charts, but they still need to
be aware of fundamental events, because they’re the catalysts
for many breaks of technical levels.
Trading events and data: Basing positions on expected
outcomes of events, like a central bank rate decision or a
G7 meeting, or individual data reports. Event/data traders
typically open positions well in advance of events and
close them when the outcome is known.
Trading with the flow: Trading based on overall market
direction (trend) or information of major buying and selling
(flows). To trade on flow information, look for a broker
that offers market flow commentary, like that found in
FOREX.com’s Forex Insider (www.forex.com/forex_
research.html). Flow traders tend to stay out of shortterm
range-bound markets and jump in only when a
market move is under way.