MASTER

VOLATILITY
75 INDEX
INTRODUCTION

Before you trade,

one must know
that you must
learn all aspects
of trading.
Before trading
volatility 75
index, you must
be a trader and
have had
general idea
about how the
market function
because there is no vast difference between trading in the general forex market and synthetic or
volatility 75 index. It requires same technical and analytic understandings. In this book, I will be
talking more on volatility 75 index and specific techniques and tricks in becoming a successful
and profitable vix75 trader. There is no difference between trading currency pairs and vix75 or
volatility index trading. They all cut across the same strategies only with slight difference and
technique.
As the name implies, Volatility is a binary pair which has many movements in its market.
Trading this pair can be profitable within few seconds and at the same time wipe your account
within few seconds. In this case, the trader needs an utmost experience and knowledge needed
in trading volatility 75 index.

Let’s proceed to our Lessons. By reading this book we are more focus and centered on volatility
75 index. We would analyze some general knowledge background of some specific key lessons
you’ll need before putting your strategies to use.
1. CANDLESTICKS ANALYSIS
Once you enter any country, you are obliged to do exactly what the country you find yourself
in does. Candlesticks are just like the language of the market. Imagine you find yourself in a
place you don’t understand the language they are speaking, how will you fit in? It’s the same
thing the trading market, the candlesticks will tell you what is going on in the market so you
would have idea about every move on the market. There are lots of candlesticks types and
patterns. However, since we are specifically on vix75, I will explain specific candles that
work specifically on vix75.

Let’s briefly look at what consist of a candle in general.

A candle consist of a body, a high, a low and a wick. Refer to the picture below

In other charts, the bullish candles are colored white while the bearish candles are colored
by black. The color does not matter, they are just preferences in variations to traders.

Take Note that the Open of the Bullish candle is the close of the bearish candle and the
close of a bullish candle is the open of a bearish candle. This is what I mean, for bullish
candles, the price opens below and closes above.

For bearish candles, the price opens above and closes below, you can refer back to the
picture.

The wicks results as a form of rejection where price are likely to reverse.

Now let’s get to certain candles does work on vix75.

ENGULFING CANDLES

There are two engulfing candles we will be looking at.

BULLISH ENGULFIN CANDLE

This is a candle that connotes the previous candle. That means it engulfs the previous
candle, the close of the bullish candle closes above the previous bearish candle. Refer to the
pic below

Now look at the Bullish candle, you can see it has totally
engulfed the bearish candle, it has closed above it, it is a sign that the bulls or buyers are
likely to come into the market anytime soon. We will further look at how to implement this
candle types once we get to support and resistance levels. How do we spot a bullish
engulfing candle?

1. The previous candle must be bearish

2. The bullish candle must engulf the previous candle

BEARISH ENGULFING CANDLES

This is the opposite of bullish engulfing candles. This is where the close of the bearish
candle closes below that of the previous candle (bullish candle).

How do we spot bearish engulfing candle?

1. The previous candle must be bullish

2. The bearish candle must engulf that of the previous candle.

 Bearish engulfing candle shows signs of market reversals where market is likely to reverse.
It does not mean that anytime there is a bullish engulfing candle or bearish engulfing candle,
market would reverse, there are vantage points at which these markets would reverse once
we spot them which will be our next topic to look at.

PRICE REJECTION CANDLES

1. HAMMER

2. HANGING MAN

These are three candles that you see when there is rejection.

HAMMER

Hammer is
made up of a long wick and a short body. By now we have learnt and known the body and
wicks of a candle. The result of this candle is because price has been rejected or pushed up
that’s why we have the long wick. It means the buyers are trying to come in that’s why you
can see that the wick is below and the body is above. Hammer occurs in a down trend. We
will soon look at vantage points in how to enter trades with this candles price rejections.

HANGING MAN
 Hanging man is basically the same as hammer. The
only difference is that,

1. Hammer occurs in a down trend

2. Hanging man occurs in an uptrend

Its similarity is that they both perform same function. Hammer is for a bullish reversal and
hanging man is for a bearish reversal.

NOW, the question we all ask, what strategy can I use to trade volatility 75 index, there are few
effective working strategy I would like to share, In real terms it works in 90% of market. We
would elaborate in details 5 profitable strategies for trading volatility 75 index. They include,

1. SUPPORT AND RESISTANCE

2. TRENDLINES

3. RETEST LEVELS AND ENTRIES

4. SIMPLE CHART PATTERNS

5. FIBONACCI RETRACEMENT TOOLS

All this strategies work independently on their own and can be traded independently,
therefore you as the trader is to pick one and master it or harmonize all and use them
together since the market moves in variation. The most beautiful thing is that you will see all
this strategies come to play along one point or the other. Let us briefly discuss how to
effectively utilize this strategic lessons on vix75.

SUPPORT AND RESISTANCE LEVELS.

WE BUY ON A SUPPORT AND SELL ON A RESISTANCE.

Most at times we hear people say price is at supply or demand, These supply and demand are
basically support and resistance Levels. The beautiful thing with support and resistance
especially with vix 75 is that it works even on the 1 min tf, so with that you can even analyze
vix75 on 1 min tf using support and resistance unlike forex indices that you would have to draw
them on higher time frame like h4 upward. Now imagine this, building that has no pillars, how
would that building stand? It will definitely collapse, because that is what is holding the building
together. Let’s get straight to it.

A resistance or a support is made up of two points that are commonly seen on two points of the
market.
Support and Resistance are the most commonly traded strategies in the market both with
indices and volatility, it always support and resistance with little candlestick knowledge and
application.

How do we connect support and resistance, we do so by looking for a common high and a
common low.

In the picture below, you could notice that they are two common points that has been marked
and joined together. So in drawing a resistance you look for a point where price has rallied up to
create a point A then comes down and goes back up, once it’s in line with point A market is
likely to fall, when it comes to vix75, support and resistance works about 90%, so traders will
mostly sell at point B because it is in line with point A and it may fall. Remember we SELL on a
RESISTANCE NOT BUY.

Take the picture above, Vix75 M15 Tf.

Let’s take point the red box and point A and green box as point B

Price rallied up to create a point that’s Point A the red short square box, then rallied down and
went up again to create point B(the green short box) to meet the first point and then came down.
What we will do is to immediately SELL on Point B because the psychology behind is that when
it gets to that point, it will sell. This is one secret about 75 I am disclosing, After a resistance A
has been initiated(red rectangle), second touches normally hold, the third touch is not advisable
to enter in as it might break the support or resistance. A third like a point C.

I will explain that with a picture below

Now look at the third touch of it, it couldn’t hold for longer, now compare the first touch or point,
the second or point, and the third touch you could see the second touch held it more than the
third one, so for the third one, instead of selling immediately, you wait for a candle such as
BEARISH ENGULFING CANDLE to tell you that it will sell, then for that you scalp the sell a little
because it might not hold longer.

Now look at the yellow region shaded yellow, you could see bearish engulfing candles on the
resistance, so you scalp the little sell for 15 min or 30 minutes because it’s on a third touch and
it might break easily. Now see after the third touch you could see that price broke it and further
went up.

Now that we have understood how resistance works on vix 75, let’s see how it works on support
as well.

DRAWING SUPPORT

Just as we saw how we draw resistance, we implement the same scenario in drawing support.
We draw support by connecting two Lows Point A and B that are on same line.

View the pic below

Price rallied down to make point A(yellow rectangle) and went up and came down to meet point
B(red rectangle). You could see that price immediately shot or bought. We are currently on
Vix75 M15 tf. So what we do on the second touch is you can BUY immediately price gets there,
you’ll BUY and put a Stop loss below the resistance a little farther.

Now let’s analyze the chart below

Before I continue look at the chart and see tell yourself what you see on the third touch(blue
box). You could see price couldn’t hold on the third touch, it broke and went down. That’s the
secret. For the third touches instead of selling or buying at the support or resistance third levels
wait for BULLISH or BEARISH ENGULFING CANDLES and scalp the for 15 or 30 minutes and
close your trades.

Now let’s see a bit more of the hammer and the hanging man. When you spot a hammer or a
hanging man on a support or resistance, it tells you that price has been rejected on that zone
and that level and price is either likely to reverse. Now let’s look at the pic below
Now I did say that hammer means market is likely to BUY especially on the support, Now let’s
look at the chart above, see what happened on the support where the long rectangle box is, that
was a hammer, it was rejected on the support, now watch what happened after the rejection, a
strong engulfing candle then after which market went up, now watch the entry level, where ive
drawn the thin horizontal line, that’s where you execute the trade, and put a SL below the
resistance. So we see the concept, immediately you entered we were soon in profit.

Some would have bought immediately at the support at the support, the difference is that they
are buying because they know market would move up a little and you are buying because you
are reading and looking at what is actually going on, it’s more like the market is communicating
with the trader.

ABOUT SUPPORT AND RESISTANCE ON HIGHER TIME FRAMES.

Don’t trade on a higher time frame such as H1 and H4 if you have a small equity with volatility
75 index.

This is the reason, Let’s say you’re trading h1 time frame on support Once the candles get to the
support level then you want to buy, what happens is that with the h1 timeframe prices are likely
to break the support or resistance and cause a little fake out before it comes back or reverses, if
you are on the smaller time frame, you get an earlier confirmation if it will actually buy.

HOW TO TRADE WITH SUPPORT AND RESISTANCE VIX75

Let’s look at how to harmonize support and resistance with higher and smaller time frame such
as using H1 and H4 and using entries such as M15 and M5 time frames.

When you open your chart, the thing you do is, First of all Draw whatever you currently see on
the higher time frame, if you’re seeing a support on the h1 or H4 time frame it means that you
should be looking for more BUYs rather than selling.so what happens is that you will be looking
for more support levels on the m15 and m5 time frames to trigger your buy opportunities.

This is vix75 H1 timeframe on October 21 st 2019

Now when I opened my trade, the first thing I saw was that on 21st October we were currently on
a support, so I drew the line to connect to my support, do not pay attention to the rest of the
candles that has occurred because on 21 st October, that was what was happening on the h1
time frame, so now how do I enter my trades? I know that if I’m on support I will BUY, so I will
switch to the m15 or m5 time frame and then I will look for support areas where I can BUY.

Watch the picture below

Now this is the m15 time frame of what was happening on 21st October, remember you as the
trader should be more interested in buying than selling because generally on the higher time
frame we are on a support level, now watch the levels of the m15, the support levels, that is
what I will be looking for, I will be looking to buy more after it has reached my support level
because we are more interested in buying than selling. So anytime price gets to the support, you
BUY. Remember the second touch and third touch and the tricks I highlighted, the second touch
normally holds while the third touch is likely to break it. Remember!
LET US WATCH ANOTHER EXAMPLE WITH A RESISTANCE

On October 18th I opened my vix 75 trading chart and I wanted to analyze trade, so after going
through the market, I saw a resistance, so what you do is to connect as seen in the picture
above, Now so after doing this remember if price is on a resistance, we SELL. Now I will move to
my smaller time frame M5 or M15, now let’s look at the chart below for M5 and M15 and
October 18th.

Looking at the picture above, you would notice that the market has respected almost all the
resistance levels and then it SOLD. You could see how the market was falling at the resistance
level. So in brief after you saw that price is currently moving under a resistance, you will make
use of all the resistance levels because the psychology behind it is that it will sell since it’s on a
resistance.

A SUPPORT TURNS INTO A RESISTANCE AND A RESISTANCE TURNS INTO A SUPPORT AFTER
BEING BROKEN.

Let’s analyze the chart below carefully

Let’s make concrete analysis.

Number 1- watch the red rectangular box, first of all it was a support right?

Number 2- now watch, when it got broken and came down, watch the green line and green
rectangular box, that old support now became a new resistance, so you could see that when
rice got there, it reversed and sold because it now served as a resistance.

Number 3- now watch the oval, price broke through the resistance, the old resistance has now
become a new support level so when price gets to that level, and it bounces up. Hope we are
following closing.

After price breaks through a resistance and goes up, and start moving up back to that
resistance, you will BUY because the resistance is now a support
Lets focus on this chart above, now see what happened initially, it was a resistance, then after
price broke through and went up, it came down to that support which was a previous resistance
so we buy from there. Hope we get the whole gist? So the resistance when it got broken it now
became a support.

Lets see another chart

See the image below

Now watch the support (yellow rectangle), it was a support then price broke though, went down
and came back up, now watch the red box, it became a new resistance of the old support so
price Fell so we SELL. So we can sell straight way from there or look for price rejection candles
such as hanging man followed by a bearish engulfing candle then we SELL. So you would notice
that the old support has now become a new resistance.
In a nut shell,

1. WHEN A SUPPORT IS BROKEN, THAT SUPPORT BECOMES A NEW RESISTANCE WHEN

PRICE BROKES IT AND START MOVING UP

2. WHEN A RESISTANCE IS BROKEN, THAT RESISTANCE BECOMES A NEW SUPPORT

WHEN PRICE START MOVING BACK TO THAT RESISTANCE

SUMMARY OF SUPPORT AND RESISTANCE LEVELS

1. BUY ON A SUPPORT AND SELL ON A RESISTANCE

2. SUPPORT AND RESISTANCE WORKS PERFECTLY ON M5, M15 AND H1. USE H4 AND H1
FOR OVERALL TREND OF MARKET.HOWEVER, M15 IS RECOMMENDED AS MORE
SUPPORT AND RESISTANCE AREAS ARE SPOTTED.

3. IF MARKET IS ON A SUPPORT OR MOVING ABOVE SUPPORT ON A HIGHER TIME

FRAME LIKE H1, MAKE USE OF THE SUPPORT (BUY OPPORTUNITIES) ON THE SMALER
TIME FRAME LIKE M5 AND M15.

4. IF MARKET IS ON A RESISTANCE OR MOVING BELOW A RESISTANCE ON A HIGHER

TIME FRAME LIKE H1, MAKE USE OF THE RESISTANCE (SELL OPPORTUNITIES) ON THE
SMALLER TIME FRAME.

5. SUPPORT AND RESISTANCE WORKS PERFECTLY ON M15, WE USE H1 TO SPOT THE

SUPPORT OR RESISTANCE ZONES AND USE M5 OR M15 FOR QUICKER ENTRIES

With this you have the potential of making more accurate and successful trades.

TRENDLINES

Trend lines are also one powerful strategic way of trading with volatility 75 index. It’s the same
scenario of support and resistance. The only difference is support and resistance moves
horizontally or we plot them horizontally while TRENDLINES move or are plotted diagonally. This
is one active way to trade with vix75 because vix75 is said to be a trendy market.

Let’s look at how to plot trend lines. In the explanation I did mention that you plot trend lines
when the market is trending thus moving diagonally so you look for two common points on that
trending market.

Let’s look at the image below

This was a market that was moving up, it was moving up while retracing, so Price rallied up and
then came back but it couldn’t meet the same point with or in line with the same first point, now
that becomes two points, so what happens is that you connect the first point and the second
point and then extend the trend line, so what happens is that if it moves up and comes down to
meet it for the third time it is likely to move back up. So for trend line, you need at least two
points to be able to execute your trade on the the third point.

Now let’s look at the image above.

Let’s take the first point, price came down there to create point A(blue box), Then it rallied up
and came down, but it couldn’t come at the same point as point A, so we connect point point
A(blue box) to point B(red box) then we wait for price to move up and come down to be in line
with point A and B just as the picture shows the green box as point C, then once price gets to
point CA we trigger our buy, or wait for our rejection candle, and you can see a hammer candle
on the line rejected giving you the confirmation its moving up. So once it hits for the third time
all you will do is to BUY because the psychology is that it will move up. Now when we were
looking at support and resistance, we said that for support and resistance the second touches
or price or point holds, but for trend lines, we need the third price or point to be able to execute
the trade that’s you will need two points or touches to be able to take the trade either sell or buy

LET’S TAKE ANOTHER EXAMPLE

This time let’s use an upper trend line also

So using the same idea of the lower trend line, we use the same idea to connect to the upper
trend line. So after price hits the third touch we SELL. Remember this is not like support and
resistance when we can buy or sell on the second touch. For trend lines, you need the first and
the second point in able to trigger your sell or buy on the third touch.

SUMMARY

For upper trend line, we SELL on the third touch

For lower trend line, we BUY on the third touch

It is not good to draw longer trend lines on time frames such as m5 and m15 as price will be
able to penetrate and break them easily. It is always good to execute your trade on a third line
after the THIRD TOUCH that’s after spotting your first and second zones on the trend line.
Anything on the 4th touch on smaller time frame of a trend line is likely to break.
It is good to draw the longer time frames or trade on the 4th touch if the direction of the current
trend is super strong or has a strong momentum of continuing that trend.

TRENDLINES WORKS ON ALL FRAMES, USE H1 UPWARD FOR GENERAL OUTLOOK AND M5 OR
M15 FOR QUICKER ENTRIES AS I EXPLAINED IN HOW TO DO WITH SUPPORT AND
RESISTANCE

RETEST LEVELS AND ENTRIES

Retest confirms the direction of a break out to move to the opposite direction after that support
and resistance or trend line has been broken out.

Now let’s look at how this retest entries work.

Retest happens only if there has been a break out of a support or a resistance. Now let’s
discuss with the image below.

This market has been moving in support and resistance zones so let’s pay attention to the
breakout. Now after it broke out from the support zone, let’s look carefully what happened after
it got broken from the support level. After it got broken from the support zone and came down it
reversed and went up again back to the broken support. That is what is called the RETEST. It is
testing that zone to further confirm that the support has been broken and its really moving down.
So after it tested that zone, it was rejected and sold, you could see that was a bearish engulfing
candle and further went down to sell. So you will only SELL after it has retested that zone and
has been rejected.

Sample 2
Price broke the resistance then reversed back to test that resistance, you could see the rejected
candle with the wick telling you the retest was successful and price is going to shoot up and we
can see clearly it went up after the retest. I therefore would always suggest that, after a
breakout, there should be a retest before entering the market or taking any trade. Entering the
market aggressively is not advised, always wait for the opportunities to come. That is how the
market works. Always wait for the right opportunities other than forcing them. Immediately it
got rejected, we quickly BUY.

SIMPLE CHART PATTERNS

There are lots of chart patterns in the market, however we will be specifically looking at chart
patterns that work specifically on volatility 75 index.

1. Head and a shoulder Pattern

2. Double Top(M pattern) and Double Bottom(W pattern)

3. Tripple Top and Tripple Bottom

4. Triangles

We will elaborate each of them specifically and detailed.

HEAD AND SHOULDERS PATTERN

Take the human body for example. Picture the head of a human with its shoulders, you will
notice that the head of a human body is above the shoulder and the shoulders are in the same
line with each other even if its tilted. Now let’s see the picture below.
 Looking at the pattern above, we have our head and
shoulders pattern, the RIGHT SHOULDER and the LEFT SHOULDER, looking at the image below
is how we are naming it or named. The left shoulder and right shoulder.

Let’s take this scenario. Price moved from a support up to create a point A and then moved
down to the support and rallied up again to point A, and broke the resistance to create a point B
and came down on that same support, then it went up to create a point C and moved and then
rallied back up to the support, this is a pattern telling us that market is likely to break the
support and moved down. The common support on which the prices reverse is called a
NECKLINE. When you take your human body, the two shoulders are connected to the neck. So
we are using the same scenario. Unlike currency pairs that we sell only after breakout, we can
sell immediately on the right shoulder when it comes to vix75 or wait till it breaks the neckline to
give you real confirmations of the trend.

Let’s take a real chart analysis to devise the explanation

One smart analytics is that head and shoulders work very well on M1 and M5
Now looking at this charty You could notice the pattern and the break out, now watch the entry
level, where I have market the short yellow line, below the neckline, when price breaks the
channel, it must close below the neckline and it must be bearish, right after it breaks it and
closes bearish below the neckline, you will SELL. Unlike currency pairs, after the break out, it
needs to retest back to the neckline, but in most cases of volatility 75, it does not retest, after it
breaks all you do is to sell and take your profit has desired.

Let’s take another example

This is also head and shoulder but an inverse form, when I mean inverse form, I mean it’s upside
down unlike the first one. So we saw price breaking through the neckline, immediately it breaks
from the neckline we can BUY. With head and shoulders, because it is seen mostly on m5 and
m15, you hardly see retest unlike when its seen once a while on higher time frames which in
some cases might need a little bit of retest. Therefore, immediately it break from the neckline,
you sell or buy depending on how it has been formed.

DOUBLE TOPS AND BOTTOMS (THE M and W SHAPE PATTERN)

DOUBLE TOP

By now after getting to this point we have an idea of how support and resistance works.

Double Top means two therefore in this scenario we simply look up of two resistance points so
we simply SELL on the second point. In this pattern, we are looking for two common and close
resistance that are on the same point in line or almost in line. It doesn’t necessarily means it
should always be a perfect straight line.

EXPLANATION- Like we said before, double

top is made up two CLOSE resistance and I’m glad we can spot resistance now. Take note of
the term used. Two resistance that are close to each other. When you spot this pattern and you
see it falling, we have to be aware that it will sell massively and break the neckline. Now we can
enter this trades in two ways, First of all we can sell immediately on the second top after it has
been rejected. We can also sell after it breaks the neckline and just a little or minor retest. As
you can see its like M.

Let’s take a chart to explain further,

With this chart, I will use a smaller chart for a better analysis
So now let’s look at the chart above, the red resistance we spotted above, you could see how
price broke rallied down after forming the M shape with a little retest I have indicated shaded
white. So I could enter this trade in two ways.

1. I can sell once I spot a rejected candle and a bearish engulfing candle on the second
resistance.

2. I can also sell after it breaks the neckline immediately or wait for it to retest a little.

DOUBLE BOTTOM (THE W SHAPE)

Double bottom is just the inverse of double top. The only difference is this is a W shape. Apart
from that, they perform the same function.

Now with this, you look for two close support areas to trigger a buy.
Now let’s look at the chart carefully, after spotting the rejected candle followed by a bullish
engulfing candle, I will immediately BUY on the second point of the sup[ort OR we can wait for
price to get to the neck line, break it and close above the neckline for us to enter our BUY
immediately.

Let’s look at this image also

By looking at the chart above, we could explain what actually happened using the same scenario.

You BUY immediately on the second support or wait for price to break the neckline.

SUMMARY

In double tops and bottoms, it’s good to trade in all frames, it is always clear on h1 time frame,
for time frames like M5 and M15, most at time price does not get to the second touch so it’s
good to execute the trade after it breaks the trend line.

In addition to this, watch or for fake outs on the neckline, now, to the complete the M pattern, it
must break the neckline and move upward but once it gets to the neckline, the market behaves
in such a way that it will be rejected and move down, it’s a simple fake out, it retraces a little and
further move upward

TRIPPLE TOP AND TRIPPLE BOTTOM

Just like we saw double means 2 so we looked for two common resistance. In this case, we are
dealing with triple tops. Triple as we generally know means 3 therefore in this case, we are
looking for 3 common resistance points of price. Means that we are looking for 3 touches on a
resistance.
Looking at the image above we had three touches on the resistance that price touched, so we
wait for the breakout on the support level after the touch third on the resistance. It is not good
to trade on the third resistance or sell on that point, remember when we were discussing on
support and resistance, I did say it’s good to trade on the 2nd touch, So once we spot this kind of
pattern, we wait for price to break the support and RETEST, before we sell. In this Pattern of the
triple top, the RETEST is very important.
Let’s analyze the chart below

Looking at the chart above, we had 3 common touches on the resistance level telling us that
was a triple top therefore there might be a break out on the support. Remember it’s not good to
sell on the third touch. You always sell after break out of the neckline and retest, we can see a
clear retest on the yellow box after the break out. After that retest and we see a pin bar candle
rejection and a candle such as a bearish engulfing candle, we sell immediately. We could see
how price rallied down after the retest and was rejected.
TRIPPLE BOTTOM

Just like we saw double means 2 so we looked for t common support areas. In this case, we are
dealing with triple bottoms. Triple as we generally know means 3 therefore in this case, we are
looking for 3 common supports points of price. Means that we are looking for 3 touches on a
support.

Looking at this picture, we could see that, with triple bottoms, we are expecting a breakout
above.

Let’s take a real chart and analyze.

Look at the chart below, we had 3 touches on the support and we could see after the break out,
price retested before it finally went up. After the retest, we BUY and place our order.
WHAT MAKES A BREAK OUT VALID?

1. If it’s a breaks out above or a resistance, the candle must be bullish and must close a
little farther above the resistance. After the close, let it retest on back on that resistance
and rejected on that level that will confirm the break out resistance.

2. If it’s a breaks out below or a support, the candle must be bearish and must close a little
farther below the support. After the close, let it retest on back on that support and get
rejected on that level that will confirm the break out of the support.

TRIANGLES

There ae different forms of triangles traded in the general market. However we will be looking at
two specific triangles that work on volatility 75 index.

1. DESCENDING TRIANGL

Descending triangles are triangles that has a support points of candles connected to a trend line
to create pattern. Let’s see the image below

Looking at the image above, I guess we have an idea of how it looks now, now we know how to
draw support line, so we look for several points or touches of a support then we look for
common touches of an upper trend line that is close to the support for us to join this lines to get
our pattern.
Let’s analyze the chart above, we had a support and a trend line as we saw in the chart, Now
after spotting this points, it does does not matter the number of touches. We are more
interested in the break out and next move.

Another important thing to also note is this, we are saying the pattern is called a descending
triangle and anything descending means going down, therefore the pattern is communication to
us that there would be a break out below and not above so we will be looking for more
breakouts on the support level. After a break out of the support, the pattern needs a retest of
the support level after the break out. Remember this is a pattern and therefore a retest is
needed. After a retest has been made and rejected, we can place our SELL. There are situations
where the price will break above for a buy, I would like to urge you not to execute such trade as
a buy in case of such occurrence. We are more interested in the break out below for a SELL.

ASCENDING TRAINGLE

Descending triangles are triangles that also has a connected resistance and a lower trend line.
Get the difference. Ascending triangle has a RESISTANCE and a lower trend line while a
Descending triangle has a SUPPORT and an upper trend line. Let’s move on with ascending
triangle. In this pattern, we connect the points of a resistance and a trend line that are also close
to each other. Let’s watch the image below
Looking at the image above we could note it has a lower trend line and a resistance.

Let’s analyze a chart

Looking at the pattern, you could see the blue box as our resistance zones and the lower trend
line with our points or zones (red box).

Let’s see how to trade this after connecting the pattern or spotting them. Remember the
number of touches does not matter. We are interested in the break out to make an entry. As the
name sounds, ascending which means something which moves up, therefore we are interested
in a break out above for a BUY. Therefore after several touches and there is a breakout, we wait
for a retest back to the resistance line and get rejected by a pin bar, then we place our BUY order,
Just as I stated above, in some occurrences it may break below instead of above however I will
urge you to look for more break outs above rather than below.

Trading Chart Patterns are also effective and visible on the M5 and M15 time frame. Always
wait for a break out and a retest before making an entry.

FIBONACCI RETRACEMENT TOOL

The market is full of ups and downs commonly known as retracements. Retracements are
bound to happen and it’s what differentiate an emotional trader and a patient trader. When you
see a market moving, the market does not move in the same direction. It fluctuates and moves
with retracements because it is made up of both bulls and bears. (Sellers and buyers.) This is a
forex tem. They buyers in the market are called bears while the sellers are called bears. Moving
on to the Fibonacci tool, we use Fibonacci tool after a zone such as a support and resistance
has been created and then price bounces of that zone. You would notice that, anytime price
gets to a support or a resistance zone and it bounces, it goes or down a little before continuing
the trend. Fibonacci is made up of some important numbers, these number serve as support
and resistance areas where price turns to reverse after getting to those points. The numbers are
23.6, 38.2, 50.0 and 61.8. We will look at the specific numbers that work on vix75 which is the
Fibonacci 50.0 and 61.8. Now it actually helps you to enter a trade when you are late because
you know that in the market retracements are bound to happen.
How to add Fibonacci tool.

1. Select the icon where you have your tools, where we normally select the lines to mark up
our charts.

2. Select the + sign and look for Fibonacci retracement and select it.

Let’s analyze a chart to simplify this

Looking at the chart above, we can see that price was on a resistance level. Now what happens
is that after price hits the resistance and rallies down, it is likely to reverse back before it
continues the trend so what you will is that, immediately you see it reversing back or retracing,
take your Fibonacci retracement tool and draw from where the price touches on the resistance
and started falling, and connect it to where price started reversing, now watch the long blue line,
that was where price reversed from the resistance zone, so what we do is, we draw the
Fibonacci from the resistance to the zone the price reversed.
Take Note- You draw from up to down and not down to up.

After drawing your Fibonacci level, we wait for price to touch two of the most important
Fibonacci levels, fib 61.8 and 50.0 after which we look for pin bar from any of the two zones to
get rejected. Looking at the chart above, you would notice that there was a pin bar on level 61.8
and got rejected after which price reversed from that zone and move back down.

Let’s analyze another chart

Looking at the support level, we saw the price going up from the support level after going up, we
could notice it retraced and started falling, so we take our Fibonacci level and draw from the
support level to where the price started reversing. Now we could see a pin bar on the fib 50.0
level and price reversed back to continue moving up. We use Fibonacci when the general trend
of the market is strong and along the movement, it retraces in and out along the movement, its
best to use the Fibonacci level, most at times we say bad entry is not good. Yes it’s not, however
the Fibonacci tool is good for the entry of these late entries.

Now take the difference between the two

When drawing Fibonacci on upper trend, you draw from the support to the point of reversal
(down to the top- support to the point of reversal)

When drawing Fibonacci on a lower trend, you draw from the resistance to the point of reversal
(Top to down-Resistance to the point of reversal).

PIN BARS

The Pin bar is a very important candle that uses lots of price to confirm the reversal of trend.

There are two pin bars.

Bullish pin bars and bearish pin bars

Let’s refer to a chart

Bullish and bearish pin bars are strong reversal candles. It is made up of a short body with
longer wicks. When you see a bullish pin bar on a support, it means price is likely to reverse and
BUY so what happens is that you could buy after you see a bullish pin bar rejected on the
support.

Bullish pin bars happens or occurs on a support level or lower trend line and they signify that
price is likely to reverse for a buy when we spot it. So immediately we see such candle on the
support level we buy. However, this two candles can sometimes occur either on the support or
resistance level but the both perform the same function telling us that market is likely to reverse.
Looking at the image above, we could see a bullish pin bar on the support line, we know that
when we are on a support line, we would buy, however the bullish pin bar would give us an extra
confirmation that price would actually buy so immediately we put up our BUY order.

Let’s refer to another chart

This is also a trend line, we could also see several pin bars rejected on the trend line confirming
that the market or price is actually pushing up so after such candle, we can easily place our buy
order.

BEARISH PIN BARS

This are also pin bars that happen on the resistance line and indicates that price is likely to fall.
Taking the image above, you could see a bearish pin bar on the resistance, so we could
immediately SELL once we spot the candle on the resistance telling us price would fall.

Sample 2

We could also see a bearish pin bar on the upper resistance line indicating price would fall.

Remember pin bars may occur both on a support or a resistance, once you spot this candles on
the support or resistance, one must know that reversal is likely to occur.
IMPORTANT TIPS ON VIX 75 INDEX

1. RETEST is always and very necessary in CHART PATTERNS BREAKOUTS

2. Third touches on Resistance and support lines are likely to break.

3. Second touches on a resistance and a support hold very often.

4. During consolidations it is always good to enter the market after breakouts without any
retest. After a consolidation break out, the market moves with massive pips

5. It is good to trade support and resistance on M15 because there will be more of this
levels in the market while you use time frames like h1 and h4 for the upper hand of the
position of the market.

6. Chart patterns are visibly seen on M5 and M15

7. Whenever there are pin bars on a support or resistance, market usually reverses.

8. During weekends, manipulations always happen and it’s advisable to only execute a
trade when the market has a clearer direction.

9. Most often, anytime price gets unto a zone, it consolidates for a while before it moves,
this actually is also an important tip that price would move from that support or
resistance zone.

10. Don’t force trades. Let the opportunities come to execute the trade.

SUMMARY

One may say which strategy works very well on vix75 index, I took my time to explain five
powerful strategies that shows up along the market. Among the strategies shown with their
techniques as each of the strategies work independently on their own, a trader may choose to;

1. Trade support and resistance only

2. Another trader might also choose to trade only channel break outs

3. Others may also choose to trade triangles and retest levels only…etc

But since the market does not move in only support and resistance only or triangles only or
breakouts only, it is good to learn all and harmonize them because at one point or the other we
would come across each of the strategy explained, however one may also stick to one strategy
and perfect it.

I wish this book has impacted greatly on your knowledge and important tips in trading vix75 and
making any reader a profitable trader after reading this book.
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