- 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.
- Weak signal (Minor Supply) before the trade was opened – o’k.
- 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.
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
- In case background is neutral in the current timeframe, you should check above timeframe. It must be strong for long entry.
- There are no strong signals before entry. It is a mistake to go long here. You see that the price is near long term and short term resistance (they are very close to each other). These resistances are a barrier for higher prices. If professionals were ready to cross this barrier we would have seen strong signals and up bars with wide spreads on high volume. Here we see no preparation for this move.
- Dynamic trend turned from red to green – it is o’k for long entry.
- This is not a good point to enter the market. For long entry you should look for down bar on low volume (no supply) – like previous bar.
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
This trade was opened based on the previous EURUSD analysis.
- Overall background is weak.
- Price was close to the resistance level (1.146) which several times has proved itself in upper timeframes. Here appeared weak signals.
- 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.
- Exit by reaching take profit level.
Total: +112 Pips
