Enter a Trade When a New Trend Begins
What does it mean to enter a trade when a trend begins?
Simply put, it is about entering a buy or sell order when a new trend begins to form, after the price has been consolidating for a period.
Specifically, enter a buy order when the price structure shows signs of shifting to an uptrend after a consolidation phase, and conversely, enter a sell order when a downtrend starts to appear after the consolidation phase.
To better understand this method, let's look at an example:
Example.
Suppose we are in a downtrend. During this phase, sellers are dominant, creating lower lows and breaking through support levels of buyers. However, after the price declines to a certain level, buyers begin to react strongly and push the price up. When buyers break through the support levels of sellers, the downtrend begins to shift into a consolidation phase.
This consolidation phase indicates that selling pressure is weakening, and when selling pressure is nearly exhausted, buyers can start to reclaim the market, creating a bullish structure. This is a sign that the downtrend may be ending and a new uptrend is forming. This is the moment when you can enter a buy order.
Notes When Applying the Method
When applying this method to enter a trade, there is an important point to note:
The consolidation phase must correspond with the previous trend phase. If it is a downtrend, the consolidation phase must be long enough to show that selling pressure has weakened and buyers can start to gain an advantage. Similarly, with an uptrend, the consolidation phase must be long enough for buying pressure to no longer be strong, and sellers can start to dominate the market.
