The following trade was on the US, Japanese Yen. There was a major sign of weakness in a Trap up-move with ultra-high volume. What prompted me to take the trade on was the No Demand principle only a couple of bars later.
A Trap Up Move occurs when there is an up bar and the next bar continues the rally and all of a sudden prices get marked down locking the traders who are long into poor positions. When I entered the position at the low of the trap-up move bar, there were Signs of Strength entering the market. The first sign of strength did not confirm, but the next Sign of Strength did confirm. The sign of strength principle was Strength Coming In. The bar closed in the top third of the range and to me that is bullish.
I decided to get out of the trade before confirmation of the sign of strength bar because of where it closed. Looking at the trade in hindsight, I probably should not have taken the trade because of the volume on the trap up-move bar. It had an ultra-high volume on a down bar which is strength. Looking at what happened afterwards to the pricing action of the USDJPY, it was good that I did get out when I did.
Trade Outcome:
Entry Price: 128.59
Stop Loss: 129.10
Take Profit: 127.69
Exit Price: 128.46
Profit: USD$99
Happy Trading
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).