Trading by volume: Up-trusts or how to check the strength of Pin-Bar
We continue to study the topic of trading in volumes on Forex, namely the VSA methodology. This time we will talk about the Up-thurst pattern, its variations, practical application, and, of course, profit from the market using this setup.
Before studying the setup of Up-Trust, I highly recommend that you familiarize yourself with the previous materials on the topic:
What is an up-trust?
Up-Thrust - VSA reversal setup, characterized by a large candle (wide spread) with a close near Low, accompanied by a relatively large volume. Often occurs after strong bullish movements, and indicates a possible change in the bullish trend. The closer the bar closes to the Low point, the stronger the formation.
Market makers absorb the crowd’s purchases, either leaving their purchases (the culmination of purchases) or entering sales on the resulting liquidity. Both can lead to the beginning of a bearish movement. But before opening sales, we need to wait for the setup confirmation (see below).
Reverse Up-Thrust is the mirror opposite of the Up-Trust. Means a possible change in the bearish movement. It has the same properties as the Ap-Trust.
Pseudo Up-Thrust (Pseudo Up-Thrust) - Up-trust on a small volume. Not so effective, but can also be regarded as a sign of a reversal.
Effort and Result
After the formation of the up-trust, we monitor the following bar:
1) If the next candle is a downbar with a close near Low, then we can assume that the market weakness is confirmed. If its volume is high - time to sell, if not - it is worth waiting for another candle. We are interested in the appearance of a downbar with a high volume and a close near Low.
2) If the next candle after the aptrust (or the second candle after the up-trust) is an upbar or downbar with a close near High, then the weakness in the market is insufficient and it is not worth considering sales.
P.S. For the reverse up-trust, everything is the same, but in a mirror image.
VSA setup Up-Trust is quite strong, but you should not enter the market without confirmation. Factors reinforcing this pattern are also:
- Reliance on the support / resistance level or the fibonacci level
- Trade only in the direction of the trend (see How to determine the trend)
And, which is also important, knowing how to work with the Up-Trust helps determine the strength of pin-bars. Analyzing the presence or absence of volumes and subsequent candles, we can draw conclusions about whether or not to enter the market.