One more trade in USDJPY opened after previous analysis. As I discribed, the market is moving sideways and 123.74 – is a key level which represents resistance to higher prices. Again price changed direction near this resistance. I waited another signals and shorted the market.
- Background turned to weak.
- Weak signal (Minor Supply) before trend changed. Reversal indicator also confirms market reversal in this place.
- Entry after dynamic trend turned from red to green (stop-loss is placed above long-term resistance)
- Exit by reaching TP level
Total: + 49 Pips
There is no stable trend in EURCHF (M15) and the price is moving sideways. On the above chart we have upper and lower limit of trading range. It is not a good idea to open a long trade when the price is near upper limit and you do not have strong signals suggesting that the resistance will be broken. Because it is unlikely that the price will leave trading range if there is no imbalance between supply and demand.
- At the time of entry background was weak – this is not o’k for a long trade. If we watch the price movement in this chart we see that background often turns from weak to neutral and to strong. This is because price is moving in a trading range and there is no clear trend.
- Weak signal near resistance before trend changed – this is a mistake to open a long trade in this point. Because this is a clear indication of price reversal. Also there are no strong signals which would suggest that price will continue to rise.
- Dynamic trend turned from red to green – o’k
- Long trade has to be immediately closed after Supply signal
This is a follow-up trade of previous EURUSD analysis. Price with high volume bars has broken lower line of ascending triangle (this is a good sign of genuine break-out). Later we had a weak signal (supply) near this line and price continued to fall.
- At the time of entry background was weak
- Weak signal (Supply) before trend changed
- Dynamic trend turned from green to red
- Entry in a low spread bar while the price didn’t move too far.
- Exit immediately after strong signal (Demand).
Total: + 160 Pips
- At the time of entry background turned to strong. It means that imbalance between supply and demand is now in favor of demand.
- We have a long-term support in the chart. This support was established by previous low. Several strong signals (Major and Minor Demand) appeared as the price was approaching the support. One more strong signal here: Shake-out – wide spread down bar accompanied by high volume. But next bars are bullish and we see price reversal. It means that it was a stopping volume which contained more buying than selling. Otherwise the price would have continued to move downwards.
- Dynamic trend turned from red to green.
- Entry – when the background turned to strong in a low volume down bar.
- Exit after reaching TP level.
Total: +105 Pips
Right after last short trade in EURAUD there was one more chance to use weak signal near the resistance level (this level has shown itself many times). Weak signal appeared during up-thrust. Up-thrust is a wide spread up during the bar, accompanied by high volume, to then close on the low. Up-thrusts are usually seen after a rise in the market or when the market is trading sideways. It is a sign of weakness – you do not normally see up-thrusts in strong markets. Up-thrusts are all moneymaking maneuvers helping the market-makers to trade successfully, at your expense.
- Background is weak
- Weak signal (Supply) near the resistance level
- Dynamic trend turned from green to red
- Entry when the price still didn’t move too far
- Exit by reaching TP level
Total +388 Pips
Earlier I noticed that short-term resistance in EURAUD has formed strong obstacle for higher prices. The price has noticed this resistance several times. Retail traders will set their sell-limit or market orders as soon as the price comes closer to the resistance level. If professionals want higher prices they will have to absorb this selling. Therefore volume will be high. Volume Spread Analysis can help us to understand whether the resistance will be broken this time (in Analytical Trader it is red bars, presence of strong signals before a move takes place and absence of weak signals).
In the above chart the price once again approached the resistance, but several weak signals suggest that there will be no rally. Therefore I found here the following setup for a short trade:
- Background is weak.
- Several weak signals (two supply signals and minor supply) near the resistance level
- Dynamic trend turned from green to red
- Entry when the price still didn’t move too far
- Exit after strong signal (minor demand)
Total +118 Pips
