GBPUSD H1 – Dynamic trend +145Pips

2015-10-18 13_09_04-GBPUSD,H1

  1. At the time of entry the background turned to strong. It means that imbalance of supply and demand is now in favor of demand.
  2. Very strong signal (Major Demand) before the trend changed its direction.
  3. Dynamic trend turned from red to green.
  4. Entry – when the background turned to strong and the price didn’t move too far from the dynamic trend.
  5. Exit after weak signal (Supply) appeared in the chart.

Total: +145 Pips

In the chart we see that mid-term resistance (previous high) was crossed by wide spread up-bar on high volume.

Resistance – this is a level of previous high, many traders bought near the highs and were locked-in when the price suddenly fell. They are now holding out in the hope of reducing their losses. Locked-in traders want only one thing – to get out of the market at a similar price to the one they first started with. Professional traders that are still bullish know this. To encourage these old locked-in traders not to sell, professional traders will mark-up, or gap up the market, through these potential resistance areas as quickly as possible.

CADCHF H1 – Trade Analysis

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  1. At the time of entry background was neutral. In this case you should check above timeframe. If it is weak – o’k for a short entry. In case the background is strong – you should not open a short trade right now.
  2. Weak signal (Minor Supply) before the trade was opened – o’k.
  3. Dynamic trend is still green. You should open a short trade when you have the whole set for a bear trade and only after the dynamic trend turns from green to red.

This is not enough just to see a weak signal and at once enter the market, because you have to analyze not only individual bars but look at the whole picture. Analytical Trader will help you to do this. You just have to follow simple instructions and wait until you have all the necessary signals before you open a trade. It will significantly increase your chances to be sucessful in trading.

EURNZD M30 – Trade analysis

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  1. Background is weak – it is ok for short trades.
  2. There is no weak signal before the entry – it is a mistake to enter the market if you do not have confirmation from strong/weak signals. These signals show you the status of imbalance between supply and demand.
  3. Dynamic trend turned from green to red – it is o’k. If other part of a short setup is in order, you should look for up-bars with low volume (no demand). No demand means that the traders who matters (smart money) are not interested in higher prices. In this case – why should we?
  4. When you see a strong signal in the chart (Major Demand, Demand or two Minor Demands), it is time to close your short trade, because there is a big chance that the price will change its direction.

Always remember that it is very important to make a good entry. But it is no less important to timely exit the market.

AUDUSD H4 – Trading down-trendline +159Pips

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In the previous AUDUSD analysis I noticed that there was no selling climax at the bottom of the market. Also there was no accumulation area. It means that bear move is not finished yet. When the price crossed down-trendline – we have 2 weak signals. Major supply (very weak signal on the top of the market) – this is an up-thrust which happened on the news that Fed postpones rate hike.

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  1. At first background was neutral (right after weak signals). I waited until it turned to weak in the process of moving down.
  2. Very weak signal above the trendline.
  3. Dynamic trend turned from green to red
  4. Entry in an up-bar (price closed above dynamic trend) after background turned to weak
  5. Exit after strong signal (Demand) which appeared near long term support.

Total: 159Pips

AUDCHF M15 – Trade analysis

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What was right in this trade?

  1. The background is weak. It means that imbalance of supply and demand in favor of supply – we should be looking for short entry.
  2. Weak signal (Minor Supply) before entry. It is better if we have several weak or very weak signals (supply or major supply).
  3. Dynamic trend turned from green to red.

What was wrong in this trade?

  1. Before the entry point we had wide spread down-bar on high volume. The next bar is up and in the chart appeared Major Demand (very strong signal). Therefore something was wrong in this high volume. For the next bar to be up it must have contained more buying than selling. Also this wide spread bar moved lower than previous low. Many traders set their sell-stop orders on the level of previous low. Those who went long set here their stop-losses. All this creates selling from the weak holders when the price crosses the level of previous low. Strong holders absorb this selling – that’s why the volume is high.

Risk management is very important in trading. You must expect losses, so you must plan for possible losses before placing a trade. Risk management techniques are designed to limit these losses. The most important part of risk management is the setting of stops, which must be placed every time. The Analytical Trader indicator will help you to find optimal level where to place your stop-loss and take profit.

EURUSD M30 – Follow-up Trade +112Pips

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This trade was opened based on the previous EURUSD analysis.

  1. Overall background is weak.
  2. Price was close to the resistance level (1.146) which several times has proved itself in upper timeframes. Here appeared weak signals.
  3. Dynamic trend turned from green to red. Entry – when the price comes closer to the dynamic trend. Stop-loss above the resistance level. After I saw strong signal I didn’t close the trade, because I thought that bear move still had potential. Strong signal here may be caused by triggering stop-losses of traders who went long when the price crossed previous high. But I moved stop-loss closer in case I was wrong.
  4. Exit by reaching take profit level.

Total: +112 Pips

AUDUSD H4 – Market analysis

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At first I zoom out H4 timeframe. Here I see that AUDUSD is moving in stable downward trend.

Then I draw down trendline with several touches. Price has noticed this trendline several times. It means that now this line is a resistance for higher prices, because traders will place their sell orders at the intersection of price and trendline. The area above the supply (higher) trend line is known as overbought area. Analyzing VSA signals (weak or strong) we can assume whether this break-out was genuine or not.

At the moment we see no strong signals in the chart.

Background in H4 is neutral and in D1 is weak – we should be looking for short trades.

Let’s get a closer look at this picture.

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There is no selling climax at the bottom of the market (after substantial falls have already taken place). Selling climax – it is an imbalance of supply and demand causing a bear market to transform into a bull market. The volume has to be extremely high on down-moves, accompanied by narrow spreads, with the price entering fresh low ground. Also there is no accumulation area.

Here we see only 2 no-supply bars (bars in the bottom of the market with low volume). It means that global downward trend is not over yet and now we have a reaction to this trend.

When the price crossed down-trendline – we have 2 weak signals. Major supply – this is an up-thrust which happened on the news that Fed postpones rate hike.

At the moment there are no strong signals, but dynamic trend is still up (green).

EURCAD M5 – Failed short trade

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What was wrong in this trade?

  1. Background is strong. If the background is strong we have to be ready to open a long trade, not short.
  2. Price was too far from resistance level. Good entry for short trade – when we have supply near resistance or trendline.
  3. This is bullish volume – wide spread up-bars on high volume. It is confirmation that bullish trend is still in force and it is too early to go short.

What was right?

  1. This is a weak signal (supply) before the trade was opened. It means that there is imbalance between supply and demand in favor of supply.
  2. Dynamic trend turned from green to red.

GBPUSD – Weak signal for short trade +67Pips

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In the previous GBPUSD analysis I noticed that the price was approaching Long Period Support and wrote that it is possible that the price starts reaction to the downward trend. Later I saw in the chart strong signal (Minor Demand). There was no high volume bar (effort) which was necessary to pass the support and it was clear that now we should expect prices to go up. It does not mean that this is a good point to go long, because background is still weak. But this would be wise to close short positions in this point.

The price was moving up, but the background was still weak. Therefore I waited supply or no-demand signal (better if it was near resistance) to open a short trade.

I found a good setup in M15 Timeframe:

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  1. The background is very weak.
  2. Price is approaching Long Period Resistance.
  3. Here we can see at once several weak signals (supply), price is near the resistance.
  4. Dynamic trend turned from green to red, entry in up-bar. Stop loss above the resistance, later moved to break-even.
  5. Strong signal (Minor Demand): in VSA this is a shake-out – wide spread bar on high volume (weak holders are still selling, but strong holders already have bullish view in the market – that’s why high volume and bar closes on the high).
  6. Exit: Total 67 Pips.

AUDCHF M30 – Entry when the price moved too far

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The only wrong thing here is that the price has already moved too far before the entry point. Always important to remember that it is better to go long with the lowest price possible and to go short with the highest price possible.