After some nice moves at the end of 2007, the forex markets have moved into a trading range that would have caused trend traders some grief! But for the more nimble traders able to recognize the market changing, trading reversals at support and resistance levels would have brought in some nice profits!

The EURUSD Daily Chart

The EURUSD has been consolidating since the beginning of January 2008.

The GBPUSD Daily Chart

The GBPUSD has also started consolidating on the daily chart, making it tougher for trend traders to pull profits out of the market.

The USDJPY Daily Chart

While the USDJPY has also been consolidating, it appears that we might have a breakout on the daily chart if prices close above recent Resistance levels.

The USDCHF Daily Chart

From the daily charts, the USDCHF definitely shows a choppy market that doesn’t have strength in either direction yet. Perhaps we might get a “heads up” from other correlated pairs like the USDJPY, EURUSD or GBPUSD.

Summary

At times like these, it’s tough to catch profits as a trend trader on the daily charts. But the fact is that all markets go through such phases, which is why patience and knowing when to stay out of the market is such a tremendous asset to being a successful and profitable trader.

If you are still blindly following trading signals without understanding how and why they work, you might already have chopped your account up somewhat. Coupled with bad money management and taking on too much risk, inexperienced traders would already have blown up their account twice over.

No matter what system you trade, be it hourly or daily, trend trading or reversals, good risk management is what will keep you in the game. You might lose some profits initially as the markets move into consolidation, but you would know when to stop trading to save your capital.

Just like life, markets go through cycles. And eventually the trends will return again.

The only question is will you still be trading, or will you have been already blown out of the trading game?