How to identify and trade a false uptrend

How to identify and trade a false uptrend 300 169 Minimalist Trading – Best Trading Indicators for TradingView

How to identify and trade a false uptrend

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Introduction

Today we’re looking at another trading setup using our technical indicators, which are considered to be among the best indicators for TradingView. In particular, we’re using the Bottoms Tops Signal in combination with the Levels and Zones, and the RSI Exhaustion.

In today’s technical setup we are able to identify and trade a false uptrend or, at least, what it looks like a very likely false upward movement of the price action. Specifically, not only we have the RSI 14 which is exhausted, but it is also significantly diverging from the price. So the RSI Exhaustion goes down, while the price goes up. Additionally, we have a top just above a support which, however, should turn soon into a resistance.

Trade setup – 17 Feb 2020

How to identify and trade a false uptrend Setup 1

The price is moving higher and a resistance has recently turned into a support.

However, we do not believe this price action, for the following reasons:

    1. There is a significant divergence between the price, which is rising, and the RSI Exhaustion, which is falling
    2. The RSI Exhaustion is bullish exhausted, meaning that the price doesn’t have too much room to move any higher
    3. We just got a confirmed top

Even if we are above a support, we see this as a great opportunity.

Of course, if the price will move below the support (hence turning it into a resistance), it’s gonna be a lot better, but we can definitely enter into the trade now considering the analysis above.

Trade update – 21 Feb 2020

How to identify and trade a false uptrend Setup 2

The price is moving into our stop loss area (we’ve been pretty generous with the stop loss right because it was possible that the price continued to rise).

However, we got another top, hence the sell setup is now even stronger.

Trade update – 25 Feb 2020

How to identify and trade a false uptrend Setup 3

The price has now moved below the major level indicated by the Levels and Zones, and since it is now a resistance, it should put a significant downward pressure to the price.

Trade closed – 28 Feb 2020

How to identify and trade a false uptrend Setup 4

The price has kept moving lower and even accelerated towards the end.

We have now closed another winning trade and cashed-in a solid return.

In the end, our fx strategy allowed us to identify and trade a false uptrend with a total profit of 3.75x. The price action even accelerated towards the end of the trade so we got out relatively rapidly. If you are navigating through multiple currency trading strategies, you should definitely take some time to learn and test this one, because for us it proved to be consistently profitable multiple years of trading.