Trading with multiple VAMAs
I want to show you how to analyse multiple timeframe VAMAs for trading opportunities. This is an interesting approach that can reveal valuable market structure information.
For this example I am using a 15m, 1h and. 4h VAMA, but you can use this on lower or higher timeframes as well. First, let's understand what each timeframe VAMA represent in this case:
The 15-minute VAMA indicates short-term trends and momentum
The 1-hour VAMA reveals intermediate trend direction
The 4-hour VAMA represents the broader market structure
When these VAMAs overlap on your lower timeframe chart (15m in this case), they create what we might call "zones of interest." Think of it like layers of support and resistance that have different degrees of significance based on their timeframe. Here's how we can interpret and use this information:
Convergence Zones
When multiple VAMAs cluster in a tight price range, this creates a significant zone of interest. For example, if your 15-minute, 1-hour, and 4-hour VAMAs are all within a narrow price band, this often indicates a strong support or resistance level. These zones typically exhibit one of two behaviors:
Price Bounces:
When price approaches a convergence zone from above or below, it often respects these levels. The more timeframes that have converged, the stronger the zone becomes. A bounce from such a zone with corresponding volume can present a high-probability trade opportunity.
Zone Breaks:
If price successfully breaks through a convergence zone, especially with increased volume, this often signals a strong trend continuation or reversal, depending on the direction of the break.
Hierarchical Trending
You can identify the strength and maturity of trends by examining how the different timeframe VAMAs are arranged:
Strong Uptrend Structure:
4H VAMA lowest
1H VAMA above 4H
15min VAMA above 1H
This "stacking" of VAMAs shows a healthy trend structure. The higher timeframe VAMAs act as dynamic support levels in an uptrend (or resistance in a downtrend).
Trade Entry Opportunities
Alignment Trades:
Look for moments when all VAMAs are pointing in the same direction and properly stacked. These situations often present high probability setups. For example: In an uptrend Price pulls back to test the 15-minute VAMA while the 1H and 4H VAMAs continue trending up.This creates a "buy the dip" opportunity with multiple timeframe confirmation.
Divergent Zone Trades:
When the faster VAMAs (1min, 15min) show divergence from the slower ones (1H, 4H), this can indicate potential reversal points: If the 1min and 15min VAMAs start curling up while price is testing the 1H VAMA as support. This divergence in shorter timeframes while respecting longer timeframe support can signal a reversal opportunity.
Breakout Confirmation:
Use the multiple timeframes to confirm breakout trades:
When price breaks above a convergence zone
Look for the faster VAMAs (1min, 15min) to cross above the slower ones
Volume should increase during the break
The previous resistance zone (marked by the VAMAs) should become support
For this example I am using a 15m, 1h and. 4h VAMA, but you can use this on lower or higher timeframes as well. First, let's understand what each timeframe VAMA represent in this case:
The 15-minute VAMA indicates short-term trends and momentum
The 1-hour VAMA reveals intermediate trend direction
The 4-hour VAMA represents the broader market structure
When these VAMAs overlap on your lower timeframe chart (15m in this case), they create what we might call "zones of interest." Think of it like layers of support and resistance that have different degrees of significance based on their timeframe. Here's how we can interpret and use this information:
Convergence Zones
When multiple VAMAs cluster in a tight price range, this creates a significant zone of interest. For example, if your 15-minute, 1-hour, and 4-hour VAMAs are all within a narrow price band, this often indicates a strong support or resistance level. These zones typically exhibit one of two behaviors:
Price Bounces:
When price approaches a convergence zone from above or below, it often respects these levels. The more timeframes that have converged, the stronger the zone becomes. A bounce from such a zone with corresponding volume can present a high-probability trade opportunity.
Zone Breaks:
If price successfully breaks through a convergence zone, especially with increased volume, this often signals a strong trend continuation or reversal, depending on the direction of the break.
Hierarchical Trending
You can identify the strength and maturity of trends by examining how the different timeframe VAMAs are arranged:
Strong Uptrend Structure:
4H VAMA lowest
1H VAMA above 4H
15min VAMA above 1H
This "stacking" of VAMAs shows a healthy trend structure. The higher timeframe VAMAs act as dynamic support levels in an uptrend (or resistance in a downtrend).
Trade Entry Opportunities
Alignment Trades:
Look for moments when all VAMAs are pointing in the same direction and properly stacked. These situations often present high probability setups. For example: In an uptrend Price pulls back to test the 15-minute VAMA while the 1H and 4H VAMAs continue trending up.This creates a "buy the dip" opportunity with multiple timeframe confirmation.
Divergent Zone Trades:
When the faster VAMAs (1min, 15min) show divergence from the slower ones (1H, 4H), this can indicate potential reversal points: If the 1min and 15min VAMAs start curling up while price is testing the 1H VAMA as support. This divergence in shorter timeframes while respecting longer timeframe support can signal a reversal opportunity.
Breakout Confirmation:
Use the multiple timeframes to confirm breakout trades:
When price breaks above a convergence zone
Look for the faster VAMAs (1min, 15min) to cross above the slower ones
Volume should increase during the break
The previous resistance zone (marked by the VAMAs) should become support
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.