In daily timeframe it is obvious that USDCAD is moving in Mark-up phase (market is rising). Up-trendline is supporting the price (price turned near this line 5 times already). Background is strong.
In H4 timeframe we can see that character of movement was changed after the price has broken resistance created by previous high (note that there was no weak signals in this timeframe or Reversal signal when price approached this resistance). After the resistance was broken, market started to move up with new pattern (angle is very steep). It is possible to draw another trendline here. There is no resistance at this price level. Background is strong, therefore we can look for a place to go long. But be careful if you see stopping volume or buying climax, because the angle of up-trendline is too steep. Very often you can see such movement before market reversal.
USDCAD M15 Trade analysis:
In this chart you can see a very popular entrance among traders – buy stop at the level of previous high. I will analyze this trade from the view of Analytical Trader.
- At the time of entry background was strong – it is a correct part for a long setup.
- There were several weak signals (two Minor Supply) before trend changed and no strong signals. It shows that selling has entered the market. It is very risky to go long in this case.
- Reversal signal also confirms that market can turn down in this place.
- Dynamic trend turned from green to red – it is wrong for a long setup.
- Trade has to be immediately closed after two Supply or Supply, Major Supply signals, because there is a big chance that prices will turn direction after this signal.
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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
GBPUSD is moving down and it is possible to draw a down-trendline with several touches. Market already turned six times near this line. Therefore it represents resistance to higher prices. The longer line is acting as resistance, the stronger it becomes and more difficult it will be to cross this resistance. Many traders have already detected this pattern and adjusted their trading accordingly. If professionals want higher prices, they will have to absorb selling from these traders. Volume in this case has to be high. Weak signals from VSA or Reversal signals will help you to understand whether the resistance will work this time or it will be broken.
What is interesting in H1 timeframe: low of last bar is exactly at the level of mid-term support (previous low).
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
