Good place for EVRT bar

Good place for EVRT bar

In my postings I use 10 Chart Reading Sings:

  • weakness: EVRT, SLKT, ND, SB, FOMO
  • strength: EVRB, SLKB, NS, DB, PANIC

What is important – there is a logical and rational place for the appearance of each of these bars. I am talking about the general market context. How one particular bar fits into the general market sentiment.

Let’s look at a good example for the appearance of an EVRT bar. Data from USDCAD market, 15m TF. This is a sign of weakness that occurs at almost every peak in the market.

  1. We had a large number of buyers in profit. This means that the market is not very happy to grow up, because the rising price will further increase the profits for bulls. Therefore, day traders (who want to trade against the Crowd) can plan shorts. Although this may seem risky, there’s no chance to get away from risks if you are trading forex. The main thing is that the risk should be justified and limited.
  2. Then there was a bullish breakout. The number of buyers’ profits surged even more. The likelihood of some decline has increased. At what level do you plan shorts entries?
  3. The Stop Loss indicator gives a hint. Here sellers set protective orders. And the cruel market will probably want to trigger them, before starting to decline. So there is an idea to sell from this level.
  4. And when the market reaches this level (actually – 1.3236), then we have EVRT. Narrow range, volume increased, no bullish progress. Please note that the previous bar made more bullish progress on a relatively smaller volume. Therefore, we can state the appearance of a signal of weakness. Professional sellers used this penetration of the previous high to open more short positions. The next bar closed below and gave confirmation.
  5. There is a surge in volume. Well, let’s assume it was a good quality demand (signal of strength). If so, why is the closing price so low? And why the next bar has a wide spread and close at a minimum.

Okay… The chart told us the story of the bearish reversal. Late buyers participated in it. As well as sellers who were shaken out of positions on the eve of the decline. Keeping short-term longs in such a situation becomes dangerous.

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