GBPUSD – VSA Market Analysis

2015-12-16 21_58_56-GBPUSD,H4

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.

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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

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EURJPY M30 Trade analysis:

  1. 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.
  2. There were several strong signals before trend changed – it is o’k. Reversal signal is also confirming market turn.
  3. Dynamic trend turned from red to green – ok.
  4. 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.
  5. 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.

USDJPY H1 – Follow-up trade +49 Pips

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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.

  1. Background turned to weak.
  2. Weak signal (Minor Supply) before trend changed. Reversal indicator also confirms market reversal in this place.
  3. Entry after dynamic trend turned from red to green (stop-loss is placed above long-term resistance)
  4. Exit by reaching TP level

Total: + 49 Pips

EURUSD – VSA Market Analysis

2015-12-06 11_59_29-EURUSD,H4

In previous EURUSD analysis you can find detailed review of price moving in ascending triangle and the place where the price has broken the lower line of triangle. After the support was broken the price had no resistance and was falling during 1 month until it approached long term support which was created by previous low in March 2015. It was the place where we could expect resistance to lower prices. Analytical Trader detected very strong signal (Major Demand) near support and market turned up. There was very high activity during this day (the volume was very high, price range was more than 450 pips compare to average which is about 100 pips). Background has already changed from weak to strong.

Let’s get a closer look at this place in lower timeframe.

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Even in this timeframe you see the same very strong signal (Major Demand) in place of price reversal. Here we have 2 wide spread up-bars on high volume. Volume always indicates the amount of activity going on, the corresponding price spread shows the price movement on that volume. Volume Spread Analysis seeks to establish the cause of price movements, and from the cause, predict the future direction of prices. The ‘cause’ is quite simply the imbalance between Supply and Demand in the market, which is created by the activity of professional operators. When reading the market, try to see things in context. If you base your analysis on an effort versus results basis, you will be taking a very sensible and logical approach that detaches you from outside influences, such as ‘news’ items, which are often unwittingly inaccurate with regards to the true reasons for a move. In our case 2 up-bars with high volume – this is effort to go up. Next bars show result of this effort – it is also bullish.

VSA and Reversal indicators will be very helpful for beginners in VSA, because even without deep theory knowledge you can easily find imbalance between Supply and Demand and a good setup for long/short trade. “Reversals” is our new indicator which with high accuracy shows the place where price changes its direction. If you are good at VSA theory, still you can use VSA and Reversal indicators, because they help you to understand the whole picture just at one glance on the chart and confirm your own view in the market.

XAUUSD H1 – Trade Analysis

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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.

  1. 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).
  2. 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.
  3. 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.

USDJPY M30 – VSA+Reversals trading +30Pips

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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.

  1. Background was strong.
  2. 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.

  1. Dynamic trend turned from red to green, entry in a down-bar when the price is near D.trend.
  2. 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.

USDJPY – Market Analysis

2015-11-29 12_32_40-USDJPY,H4

In USDJPY analysis at first I would like to discuss H4 timeframe. After the shake-out which was also a stopping volume for mark-down movement, the price started to move sideways within trading range. This was a wide trading range. Therefore trading strategy was to wait price reversal near the resistance/support of the trading range and open a trade after the necessary signals from VSA setup. With VSA and Reversal indicators it is very easy to find a good entry and exit place. This pattern has been valid for 2.5 months until we had very strong signal (Major Demand) + Reversal signal. As a result there was a break-out from this trading range.

2015-11-29 12_12_08-USDJPY,M15

More recent picture we can see in M15 timeframe. Now the price has drawn two key levels:

  • Long term support – on the above picture you can see how this support was established after several strong signals detected by VSA indicator. What is more important – the support has already shown itself twice when the price turned direction near this line (every time we had strong signals before price reversal).
  • Long term resistance – this is the level which has also shown itself. Very remarkable setup here – up-thrust, which was also a stopping volume for mark-up movement. The up-thrust is a wide spread up-bar on very high volume which closed on the lows. The high of this bar is slightly higher than previous top (not shown in this picture). Weak Holders went long in this point and smart money used this liquidity to open short positions. VSA indicator also detected a very weak signal (Major Supply) on this bar.

Look carefully when the price is approaching these levels. VSA and Reversal indicators will help you to understand next price movement.

NZDJPY H1 – Trade Analysis

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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.

CADCHF H4 – VSA+Reversals Trading +125Pips

2015-11-24 20_43_09-CADCHF,H4

As it was noticed in CADCHF analysis, price was moving in a trading channel. In the above chart we see how the price has broken the upper limit of this channel. Break-out was made by high volume up-bar. Later price touched the trendline (very often once resistance is broken it becomes support) and continued to rise. There are several wide spread up-bars with high volume near the break-out. Background turned to strong and it was clear that pattern of moving in trading channel was changed. It was time to look for long trades.

  1. Background was strong
  2. Several strong signals (Demand and Minor Demand) before trend changed. Reversal also confirms these signals.
  3. Entry after dynamic trend turned from red to green
  4. Exit by reaching TP level.

Total: + 125 Pips

Right after my exit in the chart appeared weak signal and signal from Reversal indicator, price turned down.

Reversal indicator is looking for different patterns compare with VSA indicator and quite accurately detects price reversals in the chart. The best view of market can be achieved by using both indicators.

USDTRY – Market Analysis

2015-11-22 12_12_09-USDTRY,Daily

If we look at big picture in USDTRY, we can see that Turkish lira is moving up and now we have the biggest drawdown for the last 1.5 years.

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Let’s look closely at the top of the market before price changed direction. Here we see several weak signals detected by VSA indicator. Reversal is also confirming price reversal. I want to draw special attention at up-thrust bar. This is a strong bearish signal suggesting that the price will continue to fall, especially when we have confirmation – following down-bars. Up-thrust has big volume representing high activity in this point. High of this bar is higher than previous one. Weak holders often place stop orders at the level of previous high and here these orders were activated. But it seems that professionals are not interested in upward move at the moment – the bar was closed on the lows. It means that selling absorbed buying in this bar.

2015-11-22 12_51_17-USDTRY,H4

There is a potential stop of the drawdown in H4 timeframe – wide spread down-bar on high volume closed on the highs. Also we have a Major Demand and Reversal in this place.

It makes more difficult to profit in USDTRY in long trades, because of swap value in this instrument: long swap is -67,6; short swap is 32,9. Therefore this instrument is interesting for Carry Trading (trade based on the different interest rates between two countries. The carry trade process involves selling currency of country with a low interest rate and using it to buy currency from a country with a higher interest rate). Therefore the drawdown is a very interesting moment to short this instrument on the top of the market or at the end of up-waves.