Trading with VWAP and Price Action

I am sincerely grateful to all the great people from whom I have learned over the years - how to trade and how not to trade.

Prerequisites:
1. Fully understand the basics of price action, candlesticks, support and resistance, money and risk management.

2. Trade with patience and desire, without greed or fear

3. Ability to monitor charts and trade between: European market open and London market close

Indicators used:
1. 200 EMA (Support and Resistance)

2. VWAP (Support and Resistance)

3. Trading volume (trade entry confirmation)

Trading direction is determined by HTF price movement



Preparatory steps before trading:

1. Draw horizontal and non-horizontal (trend lines) on higher timeframes (monthly, weekly, daily, 4 hours)

2. Determine the time frame for the transaction. This system is for M15 and lower - preferably M15.

3. Always check price action on all higher timeframes (4-hour, daily, weekly and monthly)

4. Ensure there is the “right” mindset and good emotional control

5. Stay away from the market before major news events such as FOMC, interest rate decisions, and non-farm payrolls reports.

6. Never chase the price.

7. Trade what you see rather than what you think

8. Capital preservation is key to long-term success. If you don't know how much money you are risking, don't trade.

Entry criteria:

1. Good volume must exist (preferably above the 200 EMA of volume)

2. Properly sized candles should be formed (avoid extreme candles that are too big or too small. See recent "normal" sized candles for the pair)

3. Make sure there is "enough" clearance to the next PA (in the direction of the trade)

Buy:

1. Price should trade above or cross the 200 EMA, close well above the previous price action area, and then retrace to
The 200 EMA or VWAP or another previous price action area, or the confluence of one or more of the 200 EMA, VWAP or PPA.

2. Wait for a high volume rejection of the area on the upside.

3. Enter after the rejected candle closes with your stop below the candle’s low

4. After the price has moved a reasonable number of pips, move the stop to achieve breakeven (depending on your trading time frame and the volatility of the currency pair, this may be
Anywhere between 25 - 40 points (on M!5). You can also move your stop loss to break even after the price moves the same number of pips as the size of the signal candle (from high to low)

5. As price continues to move in the direction of the trade, draw a trendline.

6. Exit as soon as you see a risk to reward ratio of 1:2 or 1:3, or the major PA area is reached, or the innermost trend fan is broken by price in the opposite direction.

sell:

1. Price should trade below or cross the 200 EMA, close well below the previous price action area, and then retrace to
The 200 EMA or VWAP or another previous price action area, or the confluence of one or more of the 200 EMA, VWAP or PPA.

2. Wait for a high volume rejection of the area on the downside.

3. Enter after the rejected candle closes with your stop above the candle’s high

4. After the price has moved a reasonable number of pips, move the stop to achieve breakeven (depending on your trading time frame and the volatility of the currency pair, this may be
Anywhere between 25 - 40 points (on M!5). You can also move your stop loss to break even after the price moves the same number of pips as the size of the signal candle (from high to low)

5. As the price continues to move in the direction of the trade, draw a trend line.

6. Exit as soon as you see a risk to reward ratio of 1:2 or 1:3, or the major PA area is reached, or the innermost trend fan is broken by price in the opposite direction.

Example of how to trade:



The EUROJPY sell entry below was formed after a candle with lower volume was rejected. Although this trade was successful, I would avoid it due to below average volume in the trade entry area.


High Probability Trade Setup:

1. Comprehensive rejection of multiple factors (the more, the better)
a. 200 Exponential Moving Average
b. Weighted average price of vehicles
c. HTF trend line
d. Number of rounds
e. Strong PPA area

2. Setup determined by using Multiple Time Frame (MTF) analysis

3. Look for similar candles near the Marubo Lord or Rejection Zone - these indicate dominance by either sellers or buyers. Keep an eye on the price action and draw your chart as soon as these types of candles form, especially in price rejection areas.

Sell : I usually look for candle patterns that have no bottom wick (sometimes I'm ok with a very small bottom wick: < 1 pip) and where >95% of the candle is a real body.
Buy : I usually look for candle patterns with no top shadow ((sometimes I can use a very small top shadow: < 1 pip)) and 95+% of the candles are body candles

The chart below shows an example of a Marubozu-like (not 100%) candle: Candle formed when price is rejected by VWAP


Examples of price action patterns to look for when analyzing HTF:





Rules for posting this post:

1. If you have questions/comments about HTF price action, please post using only the provided templates and indicators or no indicator chart.
There are many ways to trade, and different system releases add to the confusion, which we certainly try to avoid. Thank you for your understanding.

Duplicate posts that do not adhere to the above rules will be minimized - again there are many great ideas and many great traders, but let's stick to the system posted here.