This kind of setup is all about taking advantage of the temporary imbalance of supply and demand. Market was correcting (red trend), while there was demand coming in. After the Dynamic Trend turns up, enter in a down bar, setting the suggested SL/TP by the Alerts indicator.
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In this USDCAD chart, minor demand and minor supply on higher TFs can be seen by the blue open circles. Other signals such as No-Demand/No-Supply are also now shown as Multitimeframe signals.
For some time now that I’ve been looking closely at the Yen’s daily movements. Prices are swinging around a resistance made back in 2007, and it’s interesting to note that so far there has been a rejection of new highs. Every time the prices went above it, there was supply and the prices came falling down, which is what’s happening right now. In the beginning of July there was some demand coming in near the up trendline, which sustained the prices, but it may not be enough. The market will next test the trendline, and if decisively broken, we can expect lower prices; if it’s maintained, we should trade according to the action on the resistance, and either wait for a break-out and a test for a long, or a false break-out with more supply signals for a short position.
In the H4 the recent action can be seen more clearly, with supply and really high volumes above the resistance, and where the background had already turned to weak.
In EURGBP there was a short opportunity at the start of the week, as the support was broken. In this setup, one of the important things to watch for are weak signals before the break, which there were on the last market top. This guarantees there is a ’cause’ for the prices to go down, since it means the smart money had started distributing, effectively betting on a successful break-out. From there on, the sequence for a result of +27 pips was:
1. Weak background
2. Enter in an up bar near the broken support
3. Close in the TP level the alerts indicator suggested. Right after, there was a very strong demand signal that reversed the market
Dear Blog readers,
We’ve just launched a video that explains the Dynamic Trend Setup, make sure to check it out! It’s also posted in the page of the Dynamic Trend Setup, below the charts: https://www.analyticaltrader.com/trading-setups/trend-trading/dynamic-trend-setup/
EURGBP has shown some considerable supply on the same day as it broke the support. This earlier supply volumes were only matched by the apparently strong volumes near the support, at the beginning of the Asian session at 4th August. I say apparently, because we have to take into account that prices were nearby a previous support, and in these areas this can be just volume from retail traders buying simply because there’s a support nearby.
As the prices broke the support, with moderate volumes on the mid of the Asian session, there was a short opportunity. As prices rallied on low volumes to the broken support there were other possible entries.
There was later in the European session a strong demand signal, and just 2 hours later the market turned on yet more demand signals, this time even stronger. On the break-out setup, as in the nearby S/Rs setup, once you moved your stop-loss to break-even, you could also wait for it to hit TP instead of exiting on the first Demand signal, as in these setups, when the market trends, it trends strongly. This contrasts with other more scalping-oriented setups such as Dynamic Trend, where you should exit right in a strong signal.
