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When the Market is Strong

Market Strength in Forex: How to Recognize and Use It

In our previous materials, we discussed the signs of market weakness and learned how to identify moments when sellers take control. However, to become a successful trader, it’s equally important to recognize market strength — those moments when buyers dominate and set the pace. In this material, we will analyze the key strength patterns that will help you plan your trades and follow the trend.

When is the Market Strong?

Market strength is evident when buyers maintain high price levels and break through resistance. This activity is reflected in the combination of volume, spread, and bar formation. Recognizing these signals helps traders not only join the movement but also avoid false reversals.

Pattern "Strength A"

Characteristics:

Up bar (closing price is higher than the opening price).
Medium spread, indicating steady movement.
High or very high volume, exceeding the volume of the previous bar.
The bar closes in the upper part, confirming buyer confidence.

The higher the close relative to the previous bar, the stronger the signal. This pattern often precedes the continuation of a bullish trend.

Pattern "Strength B"

Characteristics:

Down bar (closing price is lower than the opening price).
Small or very small spread, indicating a temporary decrease in seller pressure.
High volume, reflecting buyer activity near a support level.
The bar closes in the upper part.

Although the bar appears bearish, buyers are subtly dominating. However, it is advisable to wait for confirming signals to strengthen the case.

Pattern "No Supply"

Characteristics:

Down bar, showing a temporary price drop.
Small or very small spread, indicating the lack of significant seller pressure.
Low volume, suggesting weak activity from sellers.
The bar can close at the low, in the middle, or near the top.

This pattern is often followed by an upward retracement, confirming the resumption of a bullish trend.

Pattern "Reverse Up-Thrust"

Characteristics:

Can be either an Up bar or a Down bar.
High spread, indicating strong movement.
High volume, showing significant activity from major players.
The previous low must be broken.

If it is an Up bar, the signal becomes even stronger. This pattern often occurs at the start of a strong upward move.

Pattern "Reverse Pseudo Up-Thrust"

Characteristics:

Can be either an Up bar or a Down bar.
Large spread, reflecting volatility.
Low volume, indicating weak support for the move.
The previous local low must be broken.

This pattern is common during corrections and requires confirmation before entering a trade.

Pattern "Stopping Volume"

Characteristics:

Down bar located in a new price area.
High volume, showing buyer activity absorbing sellers.
Spread ranges from medium to large, signaling a temporary market pause.
The bar closes in the middle or higher.

This pattern indicates that buyers are beginning to gain control, but price movement may continue briefly due to inertia. Wait for additional confirmations.

Key Notes

Strength A > Strength B. The "Strength A" pattern is considered a more reliable trend indicator than "Strength B." However, their simultaneous appearance significantly strengthens the signal.
Reverse Up-Thrust is stronger than its counterpart. The "Reverse Up-Thrust" is a powerful signal, especially when accompanied by high volume, while the "Reverse Pseudo Up-Thrust" often occurs during corrections.
Stopping Volume is a pause, not a reversal. This pattern warns of a temporary slowdown but does not guarantee an immediate reversal. Wait for additional signals before acting.

Conclusion

Recognizing market strength is an art that requires attention to detail and consistent practice. Use patterns like "Strength A," "Strength B," and others to find entry points confirmed by bullish activity. Remember: understanding market structure is the key to successful trading. Your success depends on how confidently you apply your knowledge in practice.

Stay tuned for our upcoming materials, where we will continue to explore essential aspects of Forex market analysis!