MomentumInvest TrendFollower [@TradersVenue]VSA CheatSheet - Have kept the chart clean and clear not by putting each signal pattern name. What matters is identifying the real price action than the pattern name. To keep the charts clutter free, haven't put the signal name under/above the candle.
Rejection or reversal patterns
Green Circle - Typical SellingClimax, Stopping Volume and Bag Holding signal patterns as per VSA. Strong price volume action but price rejection at lower level.
Red Circle - Typical Buying Climax, End Of Rising, Supply Overcoming Demand signal patterns as per VSA. Strong price volume action but price rejection at higher level.
Green Square - Typical bullish TrendReversal candle as per VSA. Bullish breakout bar immediately after a bearish breakout bar and engulfing the previous one or cover max part of it.
Red Square - Typical bearish TrendReversal candle as per VSA. Bearish breakout bar immediately after a bullish breakout bar and engulfing the previous one or cover max part of it.
Momentum breakout patterns
Blue/Green Star - Bullish breakouts. Downthrust bars with significant price volume action. Green if smaller low weak otherwise blue.
Red/Pink Star - Bearish breakouts. Downthrust bars with significant price volume action. Red if low higher weak else pink.
Candle Color
Green - Bullish with strong price action. Good to enter long towards close with SL of day low. System suggests quantity as per 2% trading rule. One can play with risk defined option strategies or cash segment as per quantity suggested.
Red - Bearish with strong price action. Good to enter short towards close with SL of day high. System suggests quantity as per 2% trading rule. One can play with risk defined option strategies like bear put spread or bear call spreads or go for hedged shorts.
Pink - Bearish with muted price action. Trail SL. Better to avoid trading these candles.
Light blue - Bullish with muted price action. Trail SL. Better to avoid trading these candles.
Plotted EMA Ribbon gives a sense of the strength of momentum. When each MA is placed with wide gaps momentum is strong. When there is EMA confluence, chances of trend strength are weakening. Background color of the chart green indicates bullishness in the underlying and red indicates that bearish pressure in the scrip. If the background color is green and you see one Blue/Green star candle it's good to go long. If the background color is red and you see one Red/Pink star candle it's good to go short.
A word of caution: Trading breakouts is very good. But you need to prepare for breakout failures. Here the system picks wide range bars for going long or short that means SL is wide probably 3% and above. Also if you notice after a strong PV breakout if price sustains below that it can see long unwinding pressure and simillary after a strong PV breakdown, if price sustains above the breakdown candle, chances of short covering is higher. Here money management and risk management becomes very important. Same has been included as part of the indicator to give you an optimal quantity for trade to keep the drawdowns lower. If you enable (1) RECO message and (2) Show Strategy (Else Study)? options then it shows a RECO box with quantity calculated as per 2% loss per trade rule. Lot of risk management, scale up/down for compounding is also available. You may try out those options one by one.
This indicator needs to be used along with the “VSA + Volume Oscillator ”, because this setup relies on VSA (Volume Spread Analysis). The overall usage will be provided through a demo to the subscribing users. In order to gain access to this indicator you may contact me using the below signature.
