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.
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
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.
- At first background was neutral (right after weak signals). I waited until it turned to weak in the process of moving down.
- Very weak signal above the trendline.
- Dynamic trend turned from green to red
- Entry in an up-bar (price closed above dynamic trend) after background turned to weak
- Exit after strong signal (Demand) which appeared near long term support.
Total: 159Pips
- The first thing that we should do – this is to find out in which direction we will open a trade. In this chart we can draw an up-trendline (200+ bars) with more than 3 touches. This trendline is a support for prices and it will require effort and money from professionals to cross this support. We will be looking for long entry when the price is near the trendline and if there is no VSA signals (in this case weak signals) which would tell us that the trend is over.
- The background is strong. It means that imbalance between supply and demand is in favor of demand (more strong signals). It confirms that we should open a long trade.
- When we see strong signals near the trendline and there is no weak signals behind, we need to be careful and wait until dynamic trend turns from red to green.
- The price touched the up-trendline and moved up. Dynamic trend turned from red to green.
- Open a trade in entry bar (in this case in the down bar when the price didn’t move too far). Stop loss may be placed lower than support line (previous low) or in the place suggested by the Alert System indicator.
- Exit after weak signals.
Based on recent analysis of USDCHF, I waited strong signals near the trendline. I didn’t have to wait too long.
- Background is strong. The price crossed down the trendline and was in oversold zone. This is a good point to look for strong signals in order to enter the market.
- In this point appeared strong signals – Major Demand in M15 and Demand in M30 timeframes. This is a wide spread bar on high volume (shake-out). The bar closes on the high. It means that there was more buying than selling and now we can expect the price to move up.
- Dynamic Trend changed from a downtrend (red) to an uptrend (green). Now we should look for entry bars.
- Long in a down bar after the trend changed.
- Close after weak signals (Minor Demand and No-Demand in H1).
- The indicator has recognized a very strong signal (Major Demand). This is a down-bar which closes in the middle on high volume (the volume is higher than during previous several days). If this volume was bearish – why the bar closed in the middle and the next bar is bullish? It helps us to understand that there was more buying than selling. This is a shake-out (smart money are buying all sell-orders coming into the market) and starting point of bullish trend.
- We draw up trendline with as minimum 3 touches. It will help us to identify when the price will be in oversold zone (under the trendline).
- The price has come to oversold zone (under the trendline) without weak signals in the background. Major Demand signal helps us to understand that this is not a genuine move and we can anticipate that the price will be returned to up trend.
- Overall strong background is supporting the move.
Swiss Franc is now in a bullish trend and at the moment we do not see weak signals which could tell us that this trend is over.
