I am a trend follower.
But I lose money when the market is in its consolidation.
How do I identify it?
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You can look directly at the price chart and note if candles looping between highs and lows at the same levels on repeated occasions - look for at least 2 highs and 2 lows. Do not ignore the wicks.
In addition you can look for indirect evidence for confirmation. There are 3 indirect clues I currently look for. For example look at the GBP/CHF daily chart (D1) for the last 3 months. Don’t go back more than 3 months and don’t use a 4-hourly time-frame for this. The chart shows price has twice made highs around 1.24 and multiple times made lows around 1.21. For confirmation -
- check the price change since 3mths ago and since 1mth ago in comparison to the other 27 pairs - both are comparatively very low
- check how many weekly candles overlap with the last weekly candle’s range. They form a bunch of no less than 12 overlapping weekly candles.
Both these confirmations tell you price is not trending.
You can also check how close together the 20 and 50EMA’s are and whether they are tending to separate - they are very close and almost parallel.
You can check how many times the daily and weekly candles have closed above and below the 50EMA in the last 3mths. Also how many times they have been breached by the 50EMA. All in comparison with the other 27 charts.
The trendiest chart recently is NZD/USD. Compare GBP.CHF with NZD/USD and more differentiating features will jump out of the screen.
The nice thing about using cumulative confirmations is that you can grade all 28 charts, so you should only be trading the strongest candidates.
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Tommor always meticulously explain s things but at your stage maybe abit difficult to understand, so even Bollinger bands may help obviously in a range they are contracted taking into account timeframe .It maybe wise to do the course on here as it starts at the very basic s
Thank you for your detailed explanation.