How to define a Weak Trend

stock market training online

A Common characteristic of a weak trend: (Uptrend)

• No-Gap opening (or) Gap opening in yesterday’s Range
• Move with overlapping bars
• Trending PHs and PLs but with deep pullbacks
• Major sideways correction after every BO
• Pullbacks cross EMA (Consecutive 2 (or) more strong bars close below EMA)
• Pullbacks go below prior swing high
• Significant Trend channel line overshoots
• Price mostly move in broad channel
• Price moves in stair patterns
• Prior few days trend is weak.

Additional important points:

There will be multiple opportunities to enter
Psychologically tough to trade because of deep pullbacks after entry
Forms more frequently
Usually, Next day follow-through is also a weak trend
Relatively big opening Range(about 50 % of ATR) results in Weak trend
Weak trends move with a lot of pullbacks, and overlapping bars hence do not move SL aggressively
Prefer 2nd Signal to enter

Trading Strategy in a weak trend:

Wait for deep pullbacks to enter(Trade like trading powerful pullback setup)
Can Trade on Limit orders
1. Calculate the distance of prior pullback (corrective move) length from the highest point(Or How much the pullback has gone below the prior swing high/ EMA)
2. Long on a limit order at an approximate distance of the previous pullback and stop loss below the latest swing low
3. Profit Target: Calculate the approximate length of earlier trend move (impulse move) and book profits bit lesser distance as compared to earlier impulsive move.
4. Short on 1st solid signal bar after the breakout of swing high
5. Profit Target: Approximate distance (bit less) of earlier pullbacks
Try to the scalp (1 R profit). If profit targets are big, try to swing part positions
Can take counter trade entries