How to use relative strength/weakness in Forex — GBPUSD exampleIchimoku makes identifying trends very easy, but it can be difficult to know when to enter a trend. This factor is often overlooked by newer traders, and it makes a significant difference to risk-adjusted returns.
One of my favourite ways to identify when to enter a trend is to use the concept of relative strength or weakness. Put simply, relative strength or weakness is when you compare a security to an "index" and try to understand whether:
The index is moving up, and your chosen security is moving up even faster = Relative Strength
The index is moving down or ranging, and your chosen security is holding ground or moving slightly higher = Relative Strength
The index is moving down, and your chosen security is moving down even faster = Relative Weakness
The index is moving up or ranging, and your chosen security is holding ground or moving slightly lower = Relative Weakness
This concept is incredibly important to understand. It can turn a B+ setup into an A+ setup.
The question is then, how do you find relative strength? The really easy, beginner-friendly, way is to plot the "Rate of Change" (ROC). This is an included indicator in TradingView and simply tells you how quickly something is moving up or down. What you can do with ROC is to plot it against the symbol you're trading, and then plot it again against an index. An example of an index could be $DXY for the USD. This index would work for pairs like USDJPY, USDEUR, USDGBP, etc. Any pair where USD is the base.
I found a perfect example of relative weakness on GBPUSD. I plotted the ROC for GBPUSD (green) and the ROC for all GBP pairs (red). Ichimoku already told me that GBPUSD was bearish and I was looking for an opportunity to go short. Notice, that when GBPUSD becomes weaker than all GBP pairs, there is almost no bullish pressure.
If you short when there is relative weakness, your trade would have almost zero drawdown, and you would be in profit almost instantly. Yes, you could short anywhere on this chart and make money if you didn't have a stoploss, but this is not how to trade like a professional. If you tried to short this morning when there was no relative weakness, you would have to suffer through +37 pips of drawdown before it started moving down again. Could you take that? Could your risk manager take that if you were trading someone else's money?
I encourage all traders to explore Relative Strength/Weakness. It is one of the most powerful concepts in trading, and as long as you have your "index" right, you can use this anywhere. Stocks, Forex, Crypto, Commoddities, etc.
Relativestrength
Stocks To Watch This WeekThere are no certainties in the stock market. These names have shown good relative strength and accumulation volume . This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 24 total stocks on this list with 0 short squeeze candidates . Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
When youtubers talk about higher and higher, I scream ALERT 🚨🚨Hello everyone,
I believe less and less in technical analysis ...
After spending more than a year staring at charts and drawing lines, I realized that the stock market has an alternative to my moves every time.
We can say that we have a correction, a flag that is responsible for the continuation of declines.
On the other hand, we have higher and higher lows and lows, which says about the trend reversal, and of course a lot of analysts claiming that there will be no more declines.
What to believe? I believe that BITCOIN will be cheap at 28k-30k and then it will be time to buy or enter futures in the long-term.
I wouldn't be surprised if the price was pushed by a wick even at 24k.
I sit with SHORT and wait for the Youtuber money to fall into my hands: D
I must warn you about the descent because this is my vision for the near future. Don't be fooled by temptation!
The plan to delete us is very simple: D Let's show them that it's growing, and they'll wake up in the morning with nothing.
Remember that I may be wrong, but the truth is, this is a fight with the player on the other side of the monitor.
Comment and like,
Regards
#buydips
ABNB - is a breakup imminent?A break of this trendline was attempted in early April which failed but gave way to a higher low. It is showing strength relative to the overall market. Odds of breaking up has increased.
Looking to Long if it breaks above the trendline resistance @ 175.50 with initial stop loss @ 167.5
With market so volatile I would prefer to cut losses fast if trade does not pan out quickly.
If trade goes our way I will scale out partially @ 191 and then 207 (fib extensions of the AB swing up)
Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important!
AUDCAD Continuing with Uptrend?Looking over the AUD/CAD chart, This is what I came up with, It's possible for OANDA:AUDCAD
, To continue uptrending up until 0.96900, This can be a long-term trade, here are some of the insights into these graphs,
that give enough information of why I think we might be going back up again :
The Relative Strength Index is about to reach the 30.00 Mark, Which symbolizes that our Graph is oversold on the 4H time graph
Our graph has touched the 4H Trendline
It is in a zone of Support, it Touched this area more than 5 times already
This is not financial advice, Although if you do take this, I wish the best for you.
Bitcoin short-term view - bullish divergence - FIB 78.6% supportBitcoin short-term view - bullish divergence - FIB 78.6% support
Looks like BTC is collecting power the get back to SMA200 on this 1h chart.
A recovery is overdue IMO - what do you think dear Crypto Nation?
Drop me a nice comment if you'd like me to analyze any other cryptocurrency.
*not financial advice
do your own research before investing
Bitcoin BTC short-term view - combination of divergencesBitcoin BTC short-term view - combination of divergences
regular bullish divergence possible (green dot line)
hidden bullish divergence possible (blue dot line)
Looking all still bullish for me - what about you?
Drop me a nice comment if you'd like me to analyze any other cryptocurrency.
*not financial advice
do your own research before investing
JasmyCoin Jasmy - similarity concerningJasmyCoin Jasmy - similarity concerning
Must be nothing but the chart similarity on price, MA Ribbon and RSI may show further sell-off action.
What do you think? Do you HODL Jasmyusdt dear Crypto Nation?
Drop me a nice comment if you'd like me to analyze any other cryptocurrency.
*not financial advice
do your own research before investing
#Syscoin #SYS - MA Ribbon flipped bullish#Syscoin #SYS - MA Ribbon flipped bullish.
RSI resistance to consider - may reduce the growth potential.
But the RSI levels when buy signal of Ribbon indicator occurs are very interesting IMO.
What do you think?
Drop me a nice comment if you'd like me to analyze any other cryptocurrency.
*not financial advice
do your own research before investing
Bitcoin BTC daily chart - Pros and consBitcoin BTC daily chart - Pros and cons
Cons:
- BTC could not brake resistance at $47.466
- BTC could not break resistance on RSI
- BTC with possible sell signal on MACD
Pros:
- BTC above EMA20, 50 and 200
- BTC above support on OBV
I tend to a bullish development for the next days and weeks - what about you Crypto Nation?
Drop me a nice comment if you'd like me to analyze any other cryptocurrency.
*not financial advice
do your own research before investing
Stocks To Watch This WeekThere are no certainties in the stock market. These names have shown good relative strength and accumulation volume . This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 28 total stocks on this list with 0 short squeeze candidates . Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
Multi Year Breakout in JINDRILLNSE:JINDRILL has broken out of multi year base with significant volumes. The stock is also outperforming benchmark index NIFTY 50 since last three months. Only caveat is its EPS strength on marketsmithindia.com is 'FAIR'. Small position can be added on pullback and then watch the trend.
Stocks To WatchMany names are holding up well in this market. Get a pen and paper because I go quickly and make the trade your own.. These names have shown good relative strength and accumulation volume and most are in the growth sector. This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 28 total stocks on this list Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
Opportunity in volatile markets. HindalcoIn volatile markets like current times, strong stocks display some characterstics which make them attractive to buy with low risk and high reward.
When broader markets takes short upturn, these stocks break out of large bases with significant buying volume. Also, when broder markets taken short downturn, these stocks pulls back to retest the support level which was previously resistance.
At this stage, small amount of money can be added and watch the trend in following days to support your hypotheses and more money can be afterwards uptrend confirmation.
Hindalco is buy as per this hypothesis as explained in attached chart.
Next market leader? $VIRTVirtu Financial is an American company that provides financial services, trading products and market making services. Although its fundamentals aren't what I ussually look for, its technicals are showing real strength in a market that laks strength.
After a nice leg up from a long cup & handle NASDAQ:VIRT took a rest and formed a nice flag pattern. In which, yesterday made a breakout and I bought a small position.
This flag has a flagstaff of 6.76 points. TA rules state that after the breakout, the price should reach the same 6.76 points up. That would be equal to target price near $42, or a +19% advance. But I'll be very cautious as there is a strong resistance level at $38.
With a IBD RS rating of 95 and a number 3 in the IBD Industry Group Rank, Virtu is posted to be one of the leaders of the next bull market. Today is a good example of leadership as is having a good follow through day with an up day of +3% while the NASDAQ is down -1.70%.
SI - Ascending TriangleEventually upside break is likely for such a pattern. Rising Relative Strength is looking promising for a breakout soon. Let's see.
Disclaimer: TA is about improving our odds of a successful trade (not a guarantee). This is just my own analysis and opinion for discussion and is NOT a trade advice. Please your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Thank you.