The reason pivot points are so popular is that they are predictive as opposed to lagging. The Commitment of Traders strategy is based on a weekly report where large institutional traders have to disclose their long and short positions. It is useful as it helps you determine when a market reversal is looming. The formation of a pin bar is actually a trend reversal featuring 3 bars. The term “Pin Bar” is an abbreviation of the term “Pinocchio Bar”. False breaks are an indication of what institutional traders are doing: hunting the stop loss levels of small retail taders to get them out of their positions and create a price “vacuum” to reverse the market’s trend. This strategy is a basic scalping strategy that aims to make quick gains off of the day’s high or low.
The rules for entry are very basic and easy to follow. Richard Demille Wyckoff’s method, which compares prices in relation to volume, was later expanded upon by Tom Williams. VSA is an analytical technique based on the trades of professional traders, it provides information on why and when traders are positioning themselves in the markets. Wave Principle”, having been inspired by Dow’s theory and Italien mathematician Fibonacci’s golden number.
For professional traders, the analysis of support and resistance levels is a crucial component of technical analysis. Here are a few cases where you can use a support and resistance forex trading strategy with trendlines. Correlations can be used to avoid bad trades, like a false break and to confirm a trade or an analysis. The idea is to see if pairs with a positive correlation are moving in the same direction as the currency pair you are interested in. This forex trading strategy is based on price action.