The latest trade on the USDJPY currency pair was a classic case of accumulation. It was traded on the 15-minute chart as I waited for the change in behaviour. It took some time but it eventually happened.
At point A, when professional money enters the market, we have a wide-spread down bar with ultra-high volume and receive the VSA principle “Strength Coming In”. We mark the top of the ultra-high volume bar as our trigger point and wait patiently.
Point B is the area of accumulation, the currency pair moves sideways testing the lows of the ultra-high volume bar. You can see when it tests, the test is on low volume, meaning no selling pressure and that the currency pair is being supported at those levels.
Point C is the most crucial. The price action breaks our trigger point. Prior to breaking the trigger point, we have an up bar that is on ultra-high volume. Usually, we say that weakness appears on up bars with ultra-high volume. A few bars after we see a test back into the area of ultra-high volume which is confirmed and the confirmation bar breaks through our trigger point. The currency pair rises for a few bars, then begins its retracement back to the trigger point. The right kind of setup I like to see.
We get a test bar back into the ultra-high volume bar and then a confirmation of the test. Let’s take a close look at the setup:
The outcome of the trade:
Trade Entry Price: 129.835
Stop Loss Price: 129.600
Take Profit Price: 130.600
Exit Price: 130.600
Profit: USD$587.35
Happy Trading
Previous Trade: USDJPY – Supply Coming in
The software tool I use to identify my high-probability trade setups is TradeGuider’s Smart Center Pro. TradeGuider is based on a methodology called Volume Spread Analysis. Volume Spread Analysis (VSA) is a proprietary market analysis method that was conceived by Tom Williams (Chairman of TradeGuider Systems).