Many apologies for being 'absent' for quite a while. Since Christmas I have had many other commitments that have not only required my time but also my attention. Trading is a game of concentration and if we are not totally absorbed in it and we cannot give all our time and attention to it then it is best to STAY AWAY. A poor psychological state will lose us money. We want to protect our trading account.
Today, before the market open, I saw a nice sign of strength. See the chart below which is a 30 minute chart of the Dow Jones. At Point A we see an increase in volume. OK, this volume is not ultra-high, but nevertheless it is an increase compared to the bars before it. The next bar is up, which means that there was some buying at Point A, but the bar which is what we are looking for is Point B - a test - low volume compared to that at Point A. Now the market opened, and then we need to see confirmation, which we see in the 15 minute chart (see further below). This is a test, even though it is a black bar (meaning it closed level with the previous bar). It has a narrow spread, and very low volume. At this point I scrolled down to lower timeframes to check we had strength there also in order to get an optimum entry point, then went long. I followed the bars, checking lower timeframes, where there was evidence of testing along the way. This is why VSA is so good - you can check and manage your trade by looking out for signs that it is going to continue in your direction. I exited the market close to the resistance level above, taking my 20 pips profit. Happy with that.
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