Follow Through Day (FTD) + Sweep [TrendX_]

позавчера

The Follow Through Day (FTD) + Sweep indicator is a Trend-following tool mixing William O'Neil's original FTD concept and Liquidity concept. This indicator helps you identify potential subsequent bullish trends with greater precision by combining volume analysis, price action, and liquidity concepts.



💎 FEATURES

Follow Through Day Candle (FTD Candle)

• The FTD, pioneered by William O'Neil, serves as a reliable signal for identifying the beginning of new bull markets. It's particularly valuable because it combines multiple market factors - price action, volume, and timing - to confirm genuine market reversals rather than temporary bounces.
  
• The power of the FTD lies in its ability to distinguish between ordinary market fluctuations and significant trend changes. By requiring specific criteria to be met across multiple sessions, it helps filter out false signals and identifies high-probability reversal points where institutional investors are likely beginning to accumulate positions.
  

Sweep Area

• The Sweep area feature enhances the traditional FTD concept by incorporating modern liquidity analysis. This overlay identifies zones where large market participants are likely to trigger stop losses before continuing the trend. These areas often represent optimal entry points for traders looking to join the new uptrend with reduced risk.
  

🔎 BREAKDOWN

FTD Candle
The FTD formation process occurs in two distinct phases: Setup and Completion.
Setup Phase

1. Strong Market Decline
   The market must first experience a significant downtrend
   This selling pressure helps clear out weak hands and creates oversold conditions
   The decline creates the potential energy for a powerful reversal
   
2. First Recovery Session
   Marks the initial sign of buying pressure emerging
   Often characterized by a strong reversal candle
   Represents the first indication that selling pressure may be exhausting
   
3. Recovery Confirmation
   
   • The second and third days must maintain prices above the new pivot low
     
   • This consolidation period helps confirm the validity of the initial bounce
     
   • Shows that sellers are no longer in control of price action
     

Completion Phase:

1. Supply Test Session
   Low volume indicates diminishing selling pressure
   Price remains above the pivot low
   Creates the foundation for institutional buyers to begin accumulating
   
2. Breakout Day
   Price increase exceeds average profit of bullish candles
   Volume increases by at least 15% compared to previous session
   Shows strong institutional commitment to the new uptrend
   
3. Timing Window
   
   • Must occur between the 4th and 8th candle after First Recovery Session
     
   • This specific timing helps confirm the sustainability of the reversal
     
   • Based on O'Neil's research of historical market bottoms
     

FTD Sweep
The Post-FTD Phase introduces the Sweep concept, which is crucial for understanding how large market participants operate. This feature leverages the liquidity concept because institutional traders often need to trigger stop losses to accumulate larger positions at better prices. This helps:

• Create liquidity pools for large position entries
  
• Shake out weak hands before continuing the trend
  
• Test the strength of the new trend by absorbing selling pressure
  

⚙️ USAGE

Sweep + TP & SL Strategy

Example: BTCUSDT (1D) - Replay back to 9th November 2024

• After an FTD candle forms, traders can adopt a systematic approach to enhance their trading strategy. First, they should determine the swing range and convert the post-FTD zone into concrete stop loss and take profit levels, which are based on the price action during the FTD formation. Next, traders should wait for a sweep formation, as this indicates that institutional players are accumulating positions. A quick price rejection from the sweep level should be observed before executing an entry.
  
• The reasoning behind this strategy is rooted in market microstructure. By waiting for the sweep, traders position themselves alongside institutional players who need to build large positions without causing adverse price movement. The sweep creates the liquidity they need, and the subsequent move often represents the true trend continuation.
  

DISCLAIMER

This indicator is not financial advice, it can only help traders make better decisions. There are many factors and uncertainties that can affect the outcome of any endeavor, and no one can guarantee or predict with certainty what will occur. Therefore, one should always exercise caution and judgment when making decisions based on past performance.