Theory of the sideways phase

These points work very well without question. However, the following indicator does not draw in any random places, but the highs and lows of the last hours. For example, there is a high of the last 4 hours. This is drawn in. These lines are particularly effective because many algorithms and traders look at these prices.

Find important price marks in the market

Zoom far out on the chart to find good entry points. Here we are looking for prices at which the market has already turned or been rejected several times. This can happen in the middle of a trend or in a sideways phase.

I have marked interesting entry opportunities with an X. Actually, it is only a matter of observing what the market does in these extreme zones. You then just wait for a suitable entry signal.

Finding extreme zones

I call an extreme zone a price point in the market where you can clearly see that demand is higher than supply or supply is higher than demand. These are highs, lows or so-called "V" formations in the market. For example, the price rises quickly and is sold off again.

In the picture above you can see extreme zones in a downtrend. At the outer edges it is extremely profitable to enter. However, such opportunities do not arise every day and you have to wait for the trades. On my Youtube channel "Trading for Beginners" you will find numerous analyses on this topic.

When the market forms a so-called "V" you can assume that the buying or selling pressure is particularly high at these prices! The market goes in one direction and then jumps back again. This can only be caused by an extreme imbalance in the market.

Wait for the entry signal

The fourth criterion for a successful CFD trading strategy in exness.com login area is to find an entry criterion. Only when this appears in the chart do I open a trade. The advantage in the daily chart is that you only have to analyse the chart once a day.

Entries: 

1.     False breakout
2.     Pincandle/Hammer
3.     Search for entries in the smaller timeframe

False breakout

The false breakout is perfect for an entry in the sideways phase. The market breaks through a support or resistance and cannot close above or below it, or quickly comes back below or above the high/low. This is a classic false breakout. The false breakout must happen on the same day or the next day, depending on where the candlestick close was.

In a false breakout, many participants in the market are fooled. Professional traders know exactly how to behave there. First, traders are fooled into trading a breakout. They enter the market. However, the professional trader takes profits at this point or a counter position. On a break of the high and low there is often high volume and the market turns.

Pincandle/Hammer

You can also see a pincandle/hammer in the picture above. This is a candle formation with a small body and large wick. The candle is formed in one direction but is pushed back by market participants. If you look in the small time frame, there is also a "V" there.

Smaller time frames

This method requires more effort and experience. If the price is at an important point that you have found in the daily chart, you can look for an entry signal in the smaller time frame (false breakout, pincandle). The advantage here is that the stop loss (risk) will be smaller.