FMC TRADINGS TECHNICAL PART 1

AUTHORS(S): TSHINAVHE.A
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 FMC TRADINGS TECHNICAL PART 1

In this PDF we will be dealing with Divergences inside the Trendlines. These are the most occurring
divergences in the market. Know them like the back of your hand. No setup , no trade. Once spotted or
identified, confirm them and MAKE THE BROKERS PAY!!!!!!!

These Divergences are basically formed by key support and resistance. Have a knowledge of support and
resistance (both horizontal and diagonal (trendlines). The divergences will be used as a Reversal pattern.
Reversal pattern are for when a trend is changing or reversing (but in this case we’ll be dealing with a
counter trend).

Note:: that live charts will not always be identical to theoretical or textbook pictures. That’s why it’s
important to know these patterns very well so that you can spot them no matter how they come.
Familiarise yourself with the following terms:

➢ Momentum: The tendency of price to continue/maintain its motion. This is called aggression or
large trader volume. It is shown by an engulfing candle.
➢ Rejection/spike: This is when price reaches a certain level/peak, then bounces and goes in the
opposite direction.
➢ Retracement/retest: The tendency of price to fall back or go back to a certain level but not so
much that it breaks that level. It goes back a little as to “retest the level” and continues in the
direction of the original trend.
➢ Reversal: This is more like a permanent retracement. Price or the trend will start going in the
opposite direction and break certain levels of support or resistance with great momentum.
➢ Support level: This is a price level where the price tends to find support as it is going down, so it
is likely to reject or “bounce” off this level rather than break through it. E.g. If you are in a
building, this would be the floor you are standing on. It supports you from going down any
further.
➢ Resistance level: This is opposite to support. This is a price level where the price tends to find
resistance as it is going up, so it is likely to reject off this level rather than break through it. E.g. If
you are in a building, this would be the roof above you. It resists you from going further up.
NOTE: Support and resistance levels won’t hold forever, price can break through those levels
and if it does so buy great momentum, it will likely continue to do so until it reaches another
level of support or resistance.
➢ Pull Away from the Zone (PAZ): You will find this area at major support or resistance levels. Price
will reject then move away from the area with great momentum. This is a confirmation.
➢ Divergence : Is when the price of an asset is moving in the opposite direction of a trend (note :
divergence pattern always oppose the trend it can either be a bullish or a bearish).
A THEORITICAL EXAMPLE OF A BULLISH DIVERGENCE.

A THEORITICAL EXAMPLE OF A BEARISH DIVERGENCE.

THE PRACTICAL EXAMPLES OF BULLISH AND BEARISH DIVERGENCES.
THEORITICAL EXAMPLE OF A BEARISH DIVERGENCE INTERSECTING THE DOWNWARD TRENDLINE.

THEORITICAL EXAMPLE OF A BULLISH DIVERGENCE INTERSECTING THE UPWARD TRENDLINE.

PRACTICAL EXAMPLES OF A BEARISH DIVERGENCE INSIDE THE DOWNWARD TRENDLINE.
PRACTICAL EXAMPLES OF A BULLISH DIVERGENCE INSIDE THE UPWARD TRENDLINE.
ALWAYS KNOW AND REMEMBER THAT:

We use major support and resistance levels for entries (instant execution or pending
orders) and exits (Take profit). However we set our SL above or below these levels,
not on them.

STEPS TO FOLLOW WHEN TRADING:

➢ Identify key support and resistance (trendlines).

➢ Spot a divergence pattern.
➢ Know your risk reward ratio and risk management.
➢ Enter upon confirmation ( it can be confirmation candlestick or pull away from the zone ). Watch
out for “False breakouts”
➢ Set your TP on key resistance and support levels.
➢ Set your SL above or below , NOT ON, key support and resistance levels.

NOTE :: WE ALWAYS ENTER OUR TRADES ON THE THIRD RETEST USING THE “3RD TOUCH
CONFIRMATION STRATEGY”.

A fearless attitude breeds limitless attitude. Don’t compete , dominate

God bless you.
The end. Thank you.