System Messages

This forum is for members of the Apiary Investment Fund. To learn more about how to get involved,
sign up now for a 14 day free trial or fill out the form below and preview the training right now!

Anchor bar reversal strategy

 
Back to Forums
 
 
mkoningmd

Anchor bar reversal strategy

Anchor bar reversal

Here is an easy way to recognize a reversal - it doesn't happen that often, but is pretty reliable when it does happen.

Anchor bars are high volume events that frequently happen at the beginning or end of a trend, or on passing an important techincal level. Here is an example of an anchor reversal (attached). A picture is worth a thousand words , so here it is on a 1 minute chart:

AttachmentSize
2018-10-18_anchor reversal.jpg170.79 KB
Thu, 10/18/2018 - 7:08pm
 
gunnyofmarines

Thanks mkoningmd something to look at and keep and eye out for

 
Rookie

Would you define an Anchor Bar as a blow out candle, the end of a pattern? simular to a hangman or its reversed gravestone?

 
dbdata3yk

good and simple............!!!

 
mkoningmd

Yeah, in the example above, the anchor marked the end of the trend. The high volume marks professional money doing business at that location - in this case closing shorts and maybe opening long positions.

The simpler the better, as far as I am concerned.

If the anchor bar is over run by selling, that also is meaningful with sellers stronger than buyers at that point.

Yes, Rookie, it will often look like a hammer or doji , the key thing is the high volume and then directional change in the bars that follow. Often that level will be retested. So you might see a smaller hammer or tailed bar on much lighter volume to follow. This is even better when it occurs at a support level.

 
dan_11

Thanks for sharing.

 
burton

so, the anchor bar is your trade identifier and the trigger is when the price breaks the high by 1 pip, for longs, and when price breaks the low by 1 pip for shorts...correct?

"the beginning or end of a trend, or on passing an important techincal level" ...can you say more about what you would call an "important technical level"?

also, it appears the chart being shared is "futures", so, are you trading both futures and forex? ...are you using the futures to identify trades in forex?

 
Rookie

Price action is price action no matter, the chart looks good to me. Consolidation and breakout! or from the S&D folks, an orders block passed the most recent and go.

 
burton

rookie, i wish i could have such an overly simplified perspective...however, at the core of the setup is volume...volume in futures does not equate to volume in forex...

"Volume and open interest statistics are not available on the spot market, as there is no centralized clearinghouse or exchange to collect the data. It is available for currency futures."

the chart is a futures chart with volume being a key indicator...apiary is primarily a forex fund, it's important for all traders that read this thread to understand what they are seeing.

 
Rookie

enlightenment!

 
kuyeko

Thanks. I've been told to be careful using the volume indicator for forex. But there may be some takeaway for the idea of this in any case. (I think one of the trades I'm currently in is doing that now...)

 
mkoningmd

Good point about volume in forex. I routinely trade the EURUSD and look at the 6E (eurUSD futures contract a the same time) so I am looking at volume on the futures contract, which is transparent. By looking at both, I feel like I am getting a bit more information. Sometimes the forex market leads the futures market. VWAP is much more accurate on futures - like to the tick accurate - many times.

On forex, the volume is often useful on a bar to bar basis on lower time frames, but you will see times (full days or more even) of low or high volume with no good explanation. So volume reporting is variable. As a result, many forex traders often don't look at volume.

Brian has been mentoring me and he says to watch for these "bars of unusual size" particularly at the end of a run up or down as they are good fade opportunities. On the futures contract these are often very high volume anchor bars. Price often runs sideways within the range of the anchor bar for a while. When price exits the range promptly, it usually goes one range in the direction, providing a nice target.

 
burton

"bars of unusual size" ...definitely a fan of watching for such changes.

 
burton

"I've been told to be careful using the volume indicator for forex." ...kuyeko, at some point, volume does have to have some significance...for example...

- if the pair has been trading at 100 ticks per minute and then ramps up to 500 ticks per minute, something is definitely happening...the question quickly becomes...

"what is happening?"

- is it the time of day?
- is it random?
- is it the market maker positioning themselves?
- was the spread opened?

spreads like to open when volume is low.

one can use volume, if they are willing to do the chart work required to find real clarity...otherwise, it's no different than any other indicator.