On 21st October 2014, there is a very strong uptrend as we can see from the 1512 volume chart. Trend is like a huge tide and we must aim to ride the waves. By observing the 56-volume chart, we can see that there is continuous divergence which has been indicated by the two yellow lines. The two yellow lines are heading for different directions and this shows us that price will continue to move up strongly.

At 10:44:30pm, the second blue bar appears and it is advisable to enter the market at this point. We do not enter in the first blue bar on the 56 volume chart because we are unable to confirm whether it is a definite signal or a “noise”.

For this trade,

  • Entry point = 1105.0
  • Stop loss = 1104.4
  • Target profit = 1106.0

After entering the market, we can see from the chart that there is a retracement until it forms a HL at 1104.7. It is important to trust your parameters and hold on to the trade. Some people might exit the market at this point to cut their losses to only 3 ticks. However after holding the trade, we will realize that we will eventually hit our target profit at 10:48:30pm.

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