NZDUSD H1 Trade analysis:
- At the time of entry background was strong – background didn’t have time to turn weak and it is wrong to go short in this case
- Weak signal (Minor Supply) before trend changed (moreover this signal appeared near mid-term resistance) – this is a correct setup for a short trade.
- Entry after dynamic trend turned red – it is o’k (the best way to open trade in a low volume up-bar while the price is not far from market turn). It is better to place stop-loss above resistance (in our case it is below – not o’k).
- Trade has to be immediately closed after two Minor Demand or Demand, Major Demand signals, because there is a big chance that prices will turn direction after this signal. Reversal signal also confirms market turn in this place.
AUDUSD was moving in descending triangle. It was possible to draw a down-trendline and market turned 4 times near this resistance. Lower limit of this triangle was a support line. Recently it was broken by wide spread down-bars with high volume.
The following trade was opened after another reversal near the down trendline:
- At the time of entry background was weak.
- Weak signal (Minor Supply) before trend changed. Reversal signal also confirms market reversal in this place.
- Dynamic trend turned from green to red.
- Entry when price still didn’t move too far (stop-loss is placed above down-trendline)
- Exit after 2 Minor Demand signals
Total: + 77 Pips
EURJPY M30 Trade analysis:
- At the time of entry background was still weak – it is wrong to go long in this place, because only strong background is a sign that imbalance between supply and demand is in favor of demand.
- There were several strong signals before trend changed – it is o’k. Reversal signal is also confirming market turn.
- Dynamic trend turned from red to green – ok.
- Entry was made in a low volume down-bar – it is a good point to enter the market, because low volume in a bear move shows that there is no selling pressure. It means that professionals are not interested in lower prices right now. Only one thing – price has moved too far after the trend changed and there is a big risk that market will turn soon.
- This is a mistake that the trade was not closed after weak signals appeared in the chart. You should close the trade immediately after 2 Minor Supply or 1 Supply, Major Supply signals. Reversal signal is also supporting exit in this place.
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
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.
At the time of entry background was weak. Therefore it was o’k to look for short trades at that moment. The entry was made after dynamic trend turned from green to red. But before the trend changed to red there were no weak signals. Entry bar is a wide spread down bar – the price moved too far. It is better to go short in an up-bar with low volume, because it shows that professionals have no interest in higher prices.
The main mistake here is that the trade was not closed after buying has entered the market. You should exit immediately after 2 Minor Demand or Demand, Major Demand signals. In addition as you can see the Reversal also confirms exit in this point.
