One of the most important aspects of forex trading is determining market direction prior to entering a trade. Advanced forex traders often use multi timeframe forex market flow data in order to determine which forex currency pairs exhibit the strongest directional flow. After all "The trend is your friend" The FX AlgoTrader Market Flow V1 forex indicator uses fractal based support and resistance levels to calculate real-time multi-timeframe forex market flow data. The flow data is then displayed in a nominated chart window. Using price derived support and resistance data to derive market flow is extremely powerful as there is no lagging effect introduced by indicators which attempt to predict future price action based on historical data. Traders who use market flow will normally only trade pairs which display 'alligned' flows. This is where the market flow is in the same direction over several timeframes. Clearly the larger the chart period the more significant the flow data becomes. For example if a forex pair had alligned market flows on the hourly, 4 hourly and Daily charts this would indicate a fairly strong trend is in place. When the market flows are alligned on the higher timeframes (as shown below) the probability for a trade in the direction of the flows has a higher outcome of success. Market flow is best used in conjunction with other support and resistance based indicators such as trendlines, multi timeframe pivots, traditional support and resisance tools and MACD for divergence checks.
USDJPY hourly chart with Daily Pivots Pro, Weekly V2, Monthly V2 and Market Flow V1 Indicators loaded. Forex Market Flow is alligned on H1,H4,Daily, Weekly and Monthly timeframes. The retrace confirmed by the "DOWN" flows on the shorter timeframes ie 5 minute, 15 minute and 30 minutes can be used as a long entry when combined with solid support and resistance from pivots, previous SR, trendline support or Fibonacci retracement levels. Click Image to enlarge.
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