Thursday 15 November 2012

Some excellent opportunities

We are clearly in a bear market at the moment, and it is often easier to trade.  A bear market seems to move quicker than a bull market.  See chart below.  This is a 10 minute of the Dow Jones Industrial 30 future.  At Point A we see very high volume (seen at the bottom of the chart), which means weakness - professional money selling.  Professional money always sell on up-bars, and buy on down-bars.  This is very high volume on an up-bar, meaning they are selling.  The next bar does not look strong either as it does not seem to want to go up above the previous bar.  The next bar (red) confirms this.  If there was buying on the previous bar, this bar would not be down.  Our perfect entry point for a short trade is at Point B.  This is no demand, and proof the professional money are not interested in higher prices.  The bar has gone up, but the volume is low - less than the previous two bars.  I shorted at this point and followed the market down to take my 20 pips.  We had another opportunity at Point C (also no demand), where I shorted and took 20 more pips.  At this point I finished and closed down the computer to go out.  But I thought I'd show another principle which is another sign of a weak market - Point D - the Upthrust.  This is a very powerful VSA principle.  The market has gone up only to fall and close on the low.  This is done deliberately by the market makers to trick traders into buying (thinking it's going up), to catch stops (which those who are short have set) and hence knock them out of the market.  They then drive the market down.  The upthrust is a typical principle seen in a weak market, but it is only an upthrust if there is weakness in the background, ie. selling (high volume on up-bars) as opposed to buying (high volume on down-bars).  Before shorting an upthrust you must make absolutely sure the market is weak.  This would have been a great trade, if I'd been around, but I'm very happy with my two trades.




1 comment:

  1. Thank you Rita for sharing your charts, do you still trade VSA style? Best regards

    ReplyDelete