TRADE FROM ACCUMULATION ZONES

14 nov 2022

Hello everyone!
Today I want to analyze a very useful topic - how to trade from accumulation zones.

Accumulation
Surely you have noticed that the price first makes an impulse, then stops, after which it makes an impulse again.
This is the simplest scheme of price movement.

Each stage can be disassembled and a good trader should be able to trade at each stage.

Accumulation is the stage at which the price moves sideways, that is, accumulates.

This stage exists due to the fact that the price cannot constantly move up or down, there are moments when the strength of sellers or buyers ends and you need to take a break, gain a new position and push the price.

Trading is possible inside the accumulation, but using a different technique, today we will discuss how to trade when the price has left the accumulation zone.

beginning
First, you should note the resistance and support levels between which the price moves in the accumulation zone.
They are usually easy to identify.
If you can't identify them, don't trade, wait for a situation that will be clear to you.

Exit
At the moment when the price goes beyond the accumulation limits, we start looking for an entry point.
Most often, if the price has broken through the accumulation zone down, the price will continue to go down.

But there are times when the price makes a false breakout and goes in the other direction.
Such moments occur and you should not forget about them.
It is impossible to always know where the price will go.

If the price has broken through the zone down, you can go straight into the short - it will be an aggressive entry.
It is aggressive because there is a possibility that this is a false breakdown and the price will go further up.
A conservative entry will be when the price rolls back to the zone and begins a reversal from it.

A reversal means that the price cannot go higher back into the zone and will fall down.

Similarly, long trades are opened only in the other direction.

As you can see on the chart, accumulation zones appear not only during the reversal, but also during the continuation of the trend.

In situations where the price after the accumulation zone went further towards the previous trend, it means that the trend is strong enough, although there was resistance on the other side.

Positions are always opened the same way:

1. Identify the area of the field.

2. Waiting for the breakdown.

3. Looking for an entry point (aggressive entry or conservative).

This technique is very simple and it works quite well.

The main thing is to follow the rules and don't risk too much.
In addition, the direction on the higher timeframe is important.

And don't forget the most important rule: the trend is your friend.
Thanks!

Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻