Near trendline trading: It is possible to draw a down-trendline with several touches. This trendline represents resistance for higher prices. The trade has been opened when the price was approaching this resistance.
- At the time of entry background was neutral. In this case you should check background in above timeframe: weak –for short trades, strong – for long trades. In this chart we definitely have a bear market – maximum of every wave is lower than previous one. It is not wise to open a long trade in this case (at first we should witness accumulation or selling climax).
- There were several weak signals before trend changed. It is unlikely that the price will break resistance when the market is weak (there is no strong signal near the trendline). As you see Reversal is also confirming market turn near the trendline.
- Dynamic trend turned from red to green and entry was made in a narrow spread bar on low volume – this is a correct setup for a long trade.
Actually this was a good place for a short trade if we would have entered the market after dynamic trend turned to red. We had all the necessary signals to be bearish.
The version 1.20 of Reversals is now available. In these last 2 updates, there was a general improvement on reversals success rate, while the least successful reversals were removed. The detection algorithms were also improved, and the lower sensitivities are now showing more reversals than before. There were also some important bug fixes along the way.
Altogether, Reversals 1.20 is now a more robust indicator than before, so if you don’t own it, you can check this page to try a free demo of the indicator.
If you already own it, make sure to update it in the Terminal > Market > Applications (while logged in the MQL5 account), or visit its page here and click ‘Buy’ while logged in (it won’t spend anything as you already own it, and it’ll download to Metatrader automatically).
GBPUSD H4 with Sensitivity = 3 (FxPro feed), a low sensitivity that has been working well in this pair’s H4 for the past months
After near support reversal described in previous USDJPY analysis, price continued to rise and background turned to strong. The following trade was opened after very strong signal detected by VSA indicator. Reversal is also confirming these signals.
- Background was strong.
- Several strong signals (Major Demand and Minor Demand) before trend changed. Reversal indicator also confirms market reversal in this place.
Let’s look closely at the Major Demand bar from the prospective of Volume Spread Analysis theory. As you see this is a wide spread down-bar with high volume. High volume represents high activity. But there has to be more buying than selling on this bar for the price to close in the middle. Next bars are also up. It means that professionals were absorbing selling from the herd by opening long positions in this place. Imbalance between supply and demand is in favor of demand, price continued to rise.
- Dynamic trend turned from red to green, entry in a down-bar when the price is near D.trend.
- Exit by reaching TP level
Total: + 30 Pips
On this chart you can see our new Reversals indicator which has high success rate of market reversals (you can see how accurately it detects price reversals on this chart). It can be used alone and together with VSA indicator. In last case you will have the greatest advantage in your trading and the best view of the market.
