Picking a Currency Pair
Scalping is all about momentum and market conditions. This means traders should be actively looking for pairs where a strong currency is pitted against a weaker one. The reason for this is to identify an active market trend in witch to participate. Below we can currently see the GBPJPY listed as a weak currency using the Strong Weak Application from the
If you are unfamiliar with Strong Weak analysis, that is ok. You can review the app along with two of its uses through a series of videos linked below. After clicking on the link, you'll be asked to input information into the 'Guestbook,' after which you'll be met with a series of videos along with additional information regarding the Strong Weak application.
Scalping A Retracement
Once a currency pair has been selected for trading, it is time to pick a strategy for trading. To help aid in this decision, traders can use Camarilla pivots to identify key technical levels for trading. Below we can see these pivots in action with key levels of resistance labeled R1-4 and support labeled S1-4.
The first methodology of trading pivots is to look for a retracement. Retracement traders will look for pullbacks in the trend and look to enter the market near a point of support and resistance. If price is in a downtrend, such as the GBPJPY, traders will look for price to move to resistance and then enter fresh sell orders. Below we can see price action from this morning's trading of the GBPJPY. First price moved up to resistance (R3), before momentum returned to the market and offering traders their first opportunity to enter fresh orders.
Trading a Breakout
The second methodology of trading Camarilla Pivots is by looking for a breakout. Above we can see a breakout occurring today on the GBPJPY at the S4 support pivot. S4 represents the last line of daily support for a currency and in a downtrend and can offer a distinct area to enter new sell orders. This process can be inverted for an uptrend, looking to sell a breakout above the R4 resistance pivot.
These are just two of the most popular ways to approach scalping