The tools used in this trade example are FX Trend, FX Power and FX Volume – you’ll find the product links right below
FX Trend / FX Trend MT5 – for the trend lines which can be used as trailing stop
FX Power / FX Power MT5 – for the unique time period based currency strength calculation
FX Volume / FX Volume MT5 – for the priceless insight of what really happens in the market
Here’s an excellent example of divergence trading on a USDCAD chart, with all lines hidden except the USD Net Long Volume and USD FX Power line.
1. The USD Net Long Volume rises
2. The USD strength drops
3. The USD strength snaps back to BUY
The same happens at points 4, 5, and 6
4. The USD Net Long Volume rises
5. The USD strength drops
6. The USD strength snaps back to BUY
This works most of the time but not always because you have to consider News, but trading these reversals provides a pretty great risk-reward ratio.
Especially around the London Opening, the USD Net Long Volume is an outstanding indication for what happens the next hours.
Happy trading
Daniel
