Identifying trend changes

[Naked shorts]

When I am following trends, I find it difficult to identify major trend changes in the market.

I wanted to know what others employ that enables them to differentiate a simple market correction, to a medium-long term trend change.

The "head and shoulders" pattern doesn't seem to work (not surprisingly)....I haven't been following the news either on the basis of, what the price should do...doesn't mean it will do.

Should I be looking at the news vigorously?


I mostly trade gbp/usd, eur/usd, aud/usd.

 

[disarray]

what timeframe chart do you use?

 

[tech/a]

The best I have found in EOD are Elliott.Often confiremed with VSA analysis but not always.
The best Ive found in shorter timeframes is VSA and possibly Elliott but dont have R/T Eilliott---seen others who have use it very effectively.
Divergence can also often give a clue.
Even the old style price bar analysis can give good leads to an end or beginning of trend.

As an example
Both the XAO and one of my latest short trades WPL which was closed out were in confluence on Sept 2nd when taken (Where the RED curser is ).
No reason why the same analysis wont work on Currencies---perhaps better!


Waiting for the trade to come to you has to be the biggest hint I can give.

 

[Naked shorts]

what timeframe chart do you use?

> 10 mins
> 5 mins
> 2 min
> tick by tick

I generally hold on to a position for more then 5mins, and less then 30.

 

[Trembling Hand]

I generally hold on to a position for more then 5mins, and less then 30.

I doubt then that you should be trend trading.

 

[BBand]

Hi Naked Shorts,

Here's a suggestion, which may or may not be applicable.

Check out your exit signal against the price action on a higher timeframe. If your signal coincides with some form of support / resistance on the higher time frame chart, then your signal may have added importance/strength?

Whether the signal turns out to show price change to be just a correction - only time will tell

Good luck

 

[Naked shorts]

I doubt then that you should be trend trading.

Until I can identify trend changes appropriately, I am happy taking what profit I make.

At the moment, the longer I hold a position, the longer I am exposed to the risk of a trend change (which may go un-identified way too late).

The best I have found in EOD are Elliott.Often confiremed with VSA analysis but not always.
The best Ive found in shorter timeframes is VSA and possibly Elliott but dont have R/T Eilliott---seen others who have use it very effectively.

Thanks Tech/a, can I ask what EOD is?

and unfortunatly VSA analysis cant be done on currencies, volume cant be shown (correct me if I am wrong).

I am looking into divergance and elliot a bit more

 

[Trembling Hand]

Thanks Tech/a, can I ask what EOD is?

and unfortunatly VSA analysis cant be done on currencies, volume cant be shown (correct me if I am wrong).

I am looking into divergance and elliot a bit more

You most certainly can get volume data for FX.

EOD = End Of Day.

Can I ask what patterns you are trading.

My point about trend trading is if you are trading off 2 min charts your setups will be better to be taking counter trends/revision to mean rather than the traditional breakout/breakdown and trend following setups. They suck for quick trades.

 

[Trembling Hand]

Another thing having trades last for less than 30 min you need VERY quick and easy set-ups and framing of R:R.

Elliot wave and other more "complex" analysis is just going to have you tied up with analysis paralysis.

Learn the patterns inside and out of the instruments that you plan to trade or forget about short term trading.

 

[BentRod]

The volume data your referring to is futures data is it TH??

 

[Trembling Hand]

The volume data your referring to is futures data is it TH??

Yes you can also get it with interbank market providers like IB.

I have no idea how anyone can trade short term blind (bucketshop data). You need to see the market.

 

[BentRod]

But where do IB get their interbank volume data?

This is where I get confused and why I disregard Volume data altogether.

 

[Trembling Hand]

But where do IB get their interbank volume data?

This is where I get confused and why I disregard Volume data altogether.

Not sure but they provide HUGE volume. Mostly I trade the CME futs but really how do you know what the players are doing? How do you know whats moving the market. the best short term trades are on capitulation volume you get a couple of tick risk and multiple(10-20) R trades. You have no idea whether the move is a liquidity suck or real trades.

I would never trade blind when looking for short trades.