Best Practice: How to react to a change of sentiment fast?
Changes in Market Sentiment is hard to catch
This is something most traders have a problem with – How to quickly identify the change in market sentiment as well as seize on the opportunity? This is where students can make use of the Danger Zones taught in Best Practice to help them to do this. I’ll illustrate using EURGBP & EURUSD.
- Previous trend is Down
- Price went through a 6 week consolidation where price was quite flat.
- In week 43, a Bullish expansion closed above the 6 weeks of high.
- This fits the criteria for a Big Move
- As long price stayed above the 6 weeks of high, we expect price to be Bullish. This zone then becomes the Danger Zone.
- Current week (Wk44), price has failed to go higher and has closed into the Danger Zone.
- Once price can close below this Danger Zone, it would have completed the criteria for a WRMB
- How to enter the trade is clear once you know the strategy to use.
Looking at EURUSD, you can note the similarities in the flow of analysis.
- Price consolidated for 3 weeks following an uptrend
- Bullish expansion in Wk42 closed above 4 weeks high leading to a Big Move. This consolidated boxes high effectively became the Danger Zone.
- Price failed to go higher before dropping in the current week 44 to close below the consolidated boxes high.
- The entry method would be similar to EURGBP.
- A failed BM will lead to a WRMB
- WRMB can be found in either trending (EURGBP) or against the trend (EURUSD) situations.
If you would like to see how we use WRMB in other market conditions, join us for the Best Practice class on
- 14 Nov 2013 (Thurs)
- 28 Nov 2013 (Thurs)