Analysis 21-12-05

How to use price action to identify market trend changes?

When prices are trending up, they mark higher highs and higher lows. Similarly, when they are in a downtrend, they hit lower highs and lows. However, the price does not always behave in this way, which is understood as a period of consolidation. These periods are represented by graphic patterns such as flags, triangles, and rectangles. In the case of our V-Power strategy, only rectangular formations are taken into account.

Keep in mind that if the price does not reach higher highs and lows, or lower highs and lows, it is not in trend.

Similarly, the consolidation period can be more readily appreciated in a low period when the price is not trending. 

These consolidation phases should be identified in H1 during the Asian session. This consolidation is an important aspect to use the V-Power strategy correctly. When the price is in a tight consolidation pattern, it is generally said to move horizontally. On the other hand, when the consolidation pattern is wide, the market is in range. In this case, there is no definite trend: V-Power System Explanation + FREE Version

Regarding consolidations, the most convenient thing is to trade in markets in tight consolidations. However, it is also possible to find trading opportunities in large range consolidations; however, the size of the false breakout must be proportional to find good reasons in the trade:   Golden Setups explained

 

Golden Setups V_Power Results

Our friend Jorge Cazal Acosta is a member of the very active V-Power private group, and he have shared with us trading results; all trades with the V-Power System. Several trades were profitable. Every day active traders in the group improve their results consistently.

 

V-Power BUY signal within the Golden Setup on EURAUD occurred recently

A descending channel is a graphic pattern made up of two parallel, sloping lines that contain price action. It is also known as a bearish price channel or simply a bearish channel. Although the price does not always adapt perfectly to the interior of the channel, the lines that form it indicate important areas of support and resistance.

Price channels graphically show the trend and are a useful tool due to their ability to predict global market trends in the short term.

In the EURAUD, the price remained within the bearish channel showing that the trend would continue, much more if there had a minimum below the lower line. 

However, the break of the upper line was a signal to buy and change the trend.

When the signal is received must be validate the following rules:

  1. Steeper trend line
  2. Support/resistance
  3. Climatic move
  4. Divergence
  5. V-Formation
  6. V-Power EA signal
  7.  Double Top/Bottom

Visual checklist.

  

 

Projections from major levels:

  • Support/Resistance Monthly:

Resistance at 1.6814 (Maroon Line) and Support (Blue line) at 1.5256

  • Support/Resistance Weekly:

Resistance at 1.6429 (Red line) and Support (Green line) at 1.5351

  • Support/Resistance Daily:

Resistance at 1.5745  (Purple line) and Support (Medium Spring Green line) at 1.5449

 

The EUR / AUD currency pair is a minor pair, accounting for less than 1% of all Forex transactions. Any change highly influences this currency pair in the price of gold, of which Australia is the world's third-largest producer. Therefore, if the price of gold goes down, the value of the AUD will go down as well. The Australian dollar is also strongly correlated with the New Zealand dollar, as New Zealand is Australia's main trading partner thanks to the proximity of both countries. When Australia's economy is healthy, imports from New Zealand increase, which has a beneficial impact on Australian economic growth.

The euro's role in the evolution of this pair is not so prominent; however, any economic data published in the Eurozone has a clear impact on the EUR / AUD pair. The EUR / AUD pair is always represented to four decimal places, although some brokers represent it to five.

After the price rises and reaches highs at 1.5745, form the daily chart with small candles that form the ceiling level.

Two days later, the market decides to fall with two large bearish candles forming a climactic movement.

Although the price did not reach the weekly support level, just before it bounced higher.

 

The second downtrend develops a big dip. There were more than 11 sessions in the 4 hour time frame that the price fell sharply.

The channel formed is quite steep, fortunately, used for trend changes.

A channel provides a multitude of relevant information for our trading.

Anyway, it must be said that the channels in the real market are practically never as perfect as the theoretical drawings that represent them. It is possible that perfect steps are not always drawn from the bottom to the top of the channel or that the parallel line is not always touched (the trend line is usually more respected). You have to know how to play with this feature. 

Within the full downward extension, a bullish candle formed at the bottom, giving the pattern for the change in trend.

 

Check list:

  1. Trend line on H1 (steeper trend line)
  2. A major resistance/support price level
  3. Matured trend on H1
  4. 3 -Days - Cycle + Climatic moves on H1
  5. A regular divergence on H1/M30 with PTS_MACD_Divergence_Box_Indi indicator
  6. V- Formation on H1

  

 1. Downward trend line on H1

Price drops approaching support levels and price increases coming to resistance zones are often an excellent point to start trades in the opposite direction of the main trend.

But it is worth clarifying that the most significant probability trends are those with very pronounced inclinations.

When the market is close to these levels, they usually accelerate, producing almost vertical movements.

Movements with these characteristics tend to be short-lived and revert to the original direction. 

We can see in the EURAUD how the second bearish trend is very steep, with a duration of approximately 3 days before the change in trend.

👉 Steeper Trend Line Trading With V-Power 👈 - https://www.perfecttrendsystem.com/steeper-trend-line-trading-with-v-power

 

2. A major support price level:

Convergences are vital in filtering signals when a trend crosses a level.

In other words, the convergences between dynamic and horizontal lines offer us the most suitable moment to enter a position. By varying both in time and price, dynamic lines provide you with essential points in the future that, contrasted with horizontal lines, can give more precise signals of where the asset's price is going. A classic example is a downtrend that lateralizes and quickly signals a rebound.

It should be noted that, on many occasions, these points of convergence are not exact and fleeting. Instead, they form a kind of opportunity zone, in which you should pay particular attention to the price reaction.

In the EURAUD, the downtrend crosses below the support at 1.5478, and the same day the price reacted higher.

👉 The Support Resistance MTF Indicator 👈 - https://www.perfecttrendsystem.com/special-offer#supp-res-mtf-indicator

 

3. Matured Downward trend on H1

Reversal days can denote a very important and significant change in the trend of stocks for the immediate future. In this case, the reversal day is called the reversal key day.

The investor has to ensure that it is a key reversal day if he examines what has happened in the market since previous dates, but other indications are also available that allow him to be sure if it is a key day. One of the clues:

That a high volume of recruitment has taken place that day in relation to the previous dates. These volumes are climactic movements near key levels.

The mature trend occurs when the price touches the support level at 1.5478

 

 4. 3-Days  Cycle + Climatic moves on H1

Often, when a trader performs trades, a position is visualized as evident; however, the opposite happens, and it touches the Stop Loss or something worse happens. These events where they are evident, and the opposite happens, are called "Market Traps".

First, it is vital to emphasize that market traps are price movements generated by large investors and make the investor think that the trend will continue at a rate when it is not.

One of the first traps in this market are false price breaks, called "Fake Breakouts", this point occurs at important support and resistance levels or before the price visits these areas.

These false breakouts are evidenced in the final accumulation phase of the V-Power structure. 

In the EURAUD, the false breakout occurred on November 16.

 

 5. A regular divergence on H1/M30 with PTS_MACD_Divergence_Box_Indi indicator

In this graph, there is no doubt that we are facing a clear downward trend since we observe how the market price is marking lower lows every time. This is the right situation we need to apply the divergence strategy.

It is crucial to always draw lines on Forex trading platforms to confirm that the lines are heading in the opposite direction to our indicators. If the lines are parallel, you will more easily recognize that there is no divergence.

The lines are only a visual aid to help identify trends; when applied several times and begin to recognize them more efficiently, you will automatically stop using these lines since an eye will be able to recognize them without problems.

Before the end of the day, the histogram crosses above the zero line, showing the impulse's strength.

👉  Divergence Box Indicator 👈 - https://www.perfecttrendsystem.com/special-offer#divergence-box-indicator

 

 6V- Formation on H1

The price breaks the trend and closes above the consolidation range of the Asian session.

Previously, it made a pullback before the signal, indicating a high probability of trend change. 

When the downtrend ends and hits the support area, a V is formed with all the rules met. A winning trade of 3.2R and 132 pips was achieved.

 

 

 TRADE DETAILS

Currency Pair:  EURAUD

Buy/Sell:  BUY

Entry Price:  1,5507

Stop Loss:  1,5449

Target Price:  1,5639

Pips+/-:  132

Actual RR:  2,2

Status:  Closed 

Strategy:  Golden Setup

 

Analysis based on steeper trend line and major support/resistance at the moment

The following analysis are based on steeper trend lines, supports/resistances, Divergences M30/H1/H4, D1, Double Top/Double Bottom and V-Power EA signals

For considering, the procedure about steeper trend line: 

  • upward move = Section 1 (>0 degrees and < 30 degrees)
  • steep upward move = Section 1 (>= 30 degrees and <=45 degrees)
  • very steep upward move = Section 2 (>45 degrees to 90 degrees)
  • downward move = Section 3 (>330 degrees and <360 degrees)
  • steep downward move = Section 3 (<= to 330 degrees and >= 315 degrees)
  • very steep downward move = Section 4 (<315 degrees to 270 degrees).

I recommend doing the steps mentioned below either for V_Power or GOLDen Setup

V_Power_Setup

Chek all rules:

Rule #1: Search only for V-Power Setups after a day which closes near the high / low of the day!

Rule #2: A tight range must develop during the Asian session with a duration of 10+ hours!

Rule #3: An additional move out of the tight range in direction of the previous day must develop

Rule #4: Choose only those entry signals which occur at least 20 hours after the tight accumulation range started

Rule #5: Choose only those entry signals which occur at least 5 hours before the trading day ends

Golden Setup

  1. Switch to D1: Check major supports and major resistances with PTS_SuppRes_MTF_Indi indicator
  2. Switch to H4: Check major supports and major resistances with PTS_SuppRes_MTF_Indi indicator
  3. Switch to H1:
    1. Check steep upward / downward trend line on H1
    2. Check matured upward / downward trend on H1
    3. Check 3 -Days - Cycle + Climatic moves on H1
    4. Ckeck regular divergence on H1 with PTS_MACD_Divergence_Box_Indi indicator
    5. Ckeck V- Formation on H1
    6. Check Sharply and Reversal moves on H1 
  1. Switch to M30
    1. Check steep upward / downward trend line on M30
    2. Check matured upward / downward trend on M30
    3. Check 3 -Days - Cycle + Climatic moves on M30
    4. Ckeck regular divergence on M30 with PTS_MACD_Divergence_Box_Indi indicator
    5. Ckeck V- Formation on M30
    6. Check Sharply and Reversal moves on M30

 

Possible LONG on AUDUSD

Check all rules on V_Power and Golden Setup.

 

 

Possible LONG on NZDUSD

Check all rules on V_Power and Golden Setup.

 

 

 Possible LONG on GBPJPY

Check all rules on V_Power and Golden Setup.

 

 

Possible LONG on GOLD

Check all rules on V_Power and Golden Setup.

 

 

Possible LONG on AUDCAD

Check all rules on V_Power and Golden Setup.

  

 

Possible LONG on AUDCHF

Check all rules on V_Power and Golden Setup.

 

 

Possible LONG on AUDJPY

Check all rules on V_Power and Golden Setup.

 

 

Possible LONG on AUDNZD

Check all rules on V_Power and Golden Setup.

 

 

 Possible LONG on EURCHF

Check all rules on V_Power and Golden Setup.

 

Possible LONG on GBPCHF

Check all rules on V_Power and Golden Setup.

 

Possible LONG on NZDCAD

Check all rules on V_Power and Golden Setup.

 

Possible LONG on NZDCHF

Check all rules on V_Power and Golden Setup.

 

Possible SHORT on EURAUD

Check all rules on V_Power and Golden Setup.

  

Possible SHORT on EURGBP

Check all rules on V_Power and Golden Setup.

 

Possible SHORT on EURNZD

Check all rules on V_Power and Golden Setup.

 

Possible SHORT on GBPAUD

Check all rules on V_Power and Golden Setup.

  

 

 

RECAP

SIGNALS FROM V_POWER AND POSSIBLE GOLDEN SETUP

 

   
   

 

Here you can read everything about the V-Power system and download a free version: V-Power System Explanation + FREE Version

By joining the V-Power community you will get access to a very active private telegram group with experienced members: Join the V-Power Community

 

 

 

 

 

About Me

I'm Mike Semlitsch the owner of PerfectTrendSystem.com. My trading career started in 2007. Since 2013 I have helped thousands of traders to take their trading to the next level. Many of them are now constantly profitable traders. 

The following performance was achieved by me while trading live in front of hundreds of my clients:

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