Forex 8 Hour Chart Strategy: What You Need to Know

If you have been trading the Forex market for a while, you know there is no “one strategy fits all” approach to trading. Each trader has different needs and preferences for daily charts. 

If you’re trading currency pairs, the most profitable of which is EURUSD, you want to make every move count.

The 5-min chart will probably be the best time frame for scalpers. However, the 8-hour and daily charts are more suitable if you are a long-term trader.

The 8-hour time frame can be handy for understanding the market trend. In addition, it gives you more information to work with as a day trader than shorter time frames.

The key is knowing the right way to use the 8-hour chart. Keep reading for a forex 8-hour chart strategy that will help you maximize your trading potential.

What Is the Forex 8 Hour Chart Strategy?

Forex 8-hour charts show you the price action over 8-hour periods of time. That can be helpful for traders who want to see the market trend over an extended period.

It's also helpful for identifying price reversals after you've confirmed the move in smaller time frames.

Why Use the 8-Hour Time Frame for Trading?

If you just started trading, you’ve likely spent hours watching a chart, trying to figure out the best way to approach it. Unfortunately, it’s often difficult to tell the next move, especially if you’re a beginner.

However, when you trade in the 8-hour time frame, things are more straightforward. You must wait 8 hours for a new candlestick, which gives you time to do other activities.

8 Hour Time Frame Trading Techniques

Understanding the reasons behind different trading strategies is essential so you can figure out which one will work for you.

Many forex traders get too focused on finding the one perfect trading method and are inflexible in their approach.

It would be best if you made decisions based on what makes sense for you and your goals.

Here are some options:

Support and Resistance Levels

Support and resistance levels are where the price stops falling or rising. You know you're dealing with a support level if you see a series of higher and lower highs.

If you see a series of lower lows and higher highs, then it’s likely that you are dealing with a resistance level.

Support and resistance levels are crucial on the 8-hour chart as they provide high-precision clues about the entries and exits.

Fibonacci Retracement

A Fibonacci retracement is a form of technical analysis widely used by veteran traders. You can find it in the tools section on your trading platform. Fibonacci retracement works best for swing trading on a daily time frame.

• In a downtrend, start from the beginning of the trend and drag the tool down and to the right.
• In an uptrend, you start at the beginning of the trend and drag up and to the right.
  

Simple Moving Average (SMA)

The SMA is a line that represents the average closing price of a currency pair over a specified period. The longer the period, the more precise it is and vice versa.

A moving average is the sum of several past values and dividing it by the number of bars that were summed.

A 10-day moving average is calculated by taking the past ten closing prices and dividing them by 10.

Exponential Moving Average: The formula calculates prices using a complex algorithm that gives more weight to recent prices. This makes it more responsive to changes in price but also creates a curve that looks like an exponential function.

Bollinger Bands

The Bollinger Bands are based on the moving average. The upper and lower bands are two standard deviations above and below the moving average, respectively.

MACD Crossover

MACD stands for Moving Average Convergence Divergence. It is a momentum indicator that uses moving averages to determine the strength of a trend.

Trading Signal: When the MACD line and signal line intersect with a change in momentum.

How to Get Started on the 8-Hour Chart

Your first step is to choose a currency pair and stick with it. Next, you can choose one strategy above or combine elements of each and create your strategy.

The next step is to set up your chart and add in the indicators. From there, perform your analysis and make your entry.

It’s crucial to keep a trading journal. Record every trade you make on the 8-hour chart and how it went, including any changes in your strategy. This will help you track your progress and identify areas where you can improve.

Get Accurate Trading Indicators and Advice

To begin using a forex 8 hour chart strategy, start by observing the price movements and identifying patterns in the market.

It may take some time before you see results using this approach, but with practice and patience, it will pay off!

If you want to make your time trading a little easier, try our MT4/MT5 indicators. It helps traders like you understand the current market conditions and make more informed decisions.