cad/jpy

A chart for luis who is having difficulty in this pair in getting direction.

The reason Luis is not seeing a clear picture is due to not looking from the 10 miles view. Always start from a high time frame and drop down. First chart is of the monthly, it is clear that price has hit sellers and is dropping back, nothing unusual or mysterious in this and is typical of how the market reacts to historic trading. Our bias on the monthly is bearish and we need see how price is playing out on lower time frames.

Monthly chart.

Weekly chart.

Two blue lines on this chart with the upper showing where the monthly supply was and the lower is weekly supply just visible on the left of the chart. The price is now within the range setup by these two price areas and last weeks weekly candle close shows no willingness on the part of the bears to push price lower and the best they have done is hit what is support....for who knows how long.

The ellipse shows price as it pushed up into the weekly supply area and how much effort was required to get through in order to reach a higher target. Clearly the amount of money placed in the market to do this must be put to work and the pace at which price dropped off two weeks ago (3rd candle back) is a clear sign of bulls wasted from the effort and plenty profit taking done.

The area within the ellipse wont have many buyers remaining and while I dislike making any predictions it typically results in price being able to fall easily through that area with little bullish reaction until buyers lower down come into play.

Daily chart.

This is where Luis focused his attention and lost out on all the good intel on the charts above. You have to know where price has been in order to have a better understanding of where it can go next. The upper blue line on this chart is weekly supply and once this was pinned the profit taking came in hard and fast, this caused the market to fall off quickly and on this time frame there was no opportunity to take a short trade. The lead up to this was a range play and difficult to find quality entries with low risk. Given the market was bullish you would have to look for entries off the bottom of the range and only when there was clear intent to take the market back up. Going down to the 4hr and lower is essential for better entries in ranges, if thats the kind of trading you prefer.

4hr chart.


Upper blue line is higher time frame supply which is clear from what we have seen already. The profit taking is very clearly seen from long bodies bearish candles breaking numerous historic buying areas. The subsequent pull back took a much longer period of time and no interest from pro money. The game for the bulls was up at this stage and now was a simple matter for pro money to get enough time in which to place their short orders into the market before it drops away.

Two minor pull backs with small ranges is what they used to sell into. The purist supply and demand traders got wiped out in this because that kind of trading alone does not take the dynamics of market sentiment into account and where a pull back is looked at as a reason to continue the previous move. This is why you must look at higher time frames to get direction and if that means waiting a week or more for the main move to continue, then it pays to do so.

Finally, the bottom of the chart shows a blue line just in view. This is the range setup from the previous time frame and you see a closer view here of this range and how price reacted off both sides of the range. The near current reaction at the bottom of the range is so far showing no interest in climbing back up.

Note the dominant bullish candles are reducing in the price range of their real bodies and over all range. The bearish response to these candles is also clear, there is a slow shift in sentiment and we have to wait for another bounce or break out of the lower end of the range. At this day of the week there wont be a good setup for a trade on this pair until at least next week.

I will leave the lower time frames out because they will only show noise at the moment and until there is better price action no closer in views are helpful.

usd/cad

An after the fact series of trades taken off the 4hr chart and exit on the 15min. I didnt drop to lower time frames for an entry because the bug I had happened upon did not make for longer periods of concentration. Even so I netted over 1100 points on three trades and scaled in for lower risk.

Weekly chart.

Blue line is weekly supply/resistance. The down arrow shows a test of the historic price action on the hard left edge of the chart. That test resulted in little interest from the bears and an immediate reply from the bulls with obvious buying coming in over a few sessions. 

Daily chart.

I now have two blue lines to show more recent price action and where support could come in. The bounce shows classic buying from the place I want to see it most, off support and where the intention is clear. You wont always see price action so clear on all time frames and its best to take your lead off multiple time frames. Clear for all to see is the buying with strong and immediate response to any bearish activity. There was a long wait for such long trades if you had missed the entries months ago.

4hr chart.


These were the three entries I took and scaled into the position. My stop was below the swings and not much risk involved. You can see how much effort went into taking price higher by the bulls, they had to allow price come back down low several times before enough orders were to the long side and where they had enough reserve to give price one hard push over 4hrs to break through resistance and take the heat of short orders, note the instant pull back, they really wanted price out and gone from this area quickly.

I closed all positions manually a few hours before the market close. Now it is a matter of wait and see how far price will come back and look for more long entries. One other thing I will point out is the false bearish move before my left most entry. If that didnt get you short and you saw the bullish reaction, there was a good sign of who was in control and that more was likely to come if you wait.

usd/jpy

Been unwell for the past few weeks and only now coming back to normality, I have had little interest in trading while my system fought off some unwanted invaders. Anyway, lets get down to business.

Here is a long term view of usd/jpy which is setting up nicely and a few other pairs have a similar profile and this will attract the interest of long term investors. This is my 10 mile view and the chart is zoomed out for an overall best big picture look. What we see is long term support and buying on the bottom grey box which price reached back in March of 2012 and spent a few months in there before leaving and returning for a second hit which is where professional money bought the usd by the truck load. There is nothing magical happening here and its simple support/buying at the major areas of interest on the higher time frames.

The middle grey box was near term target for the pro bulls and it is also a support and resistance area. While not very clear on this image is price is now testing this area to see will it hold i.e is there enough interest to continue with the bullish move. Finally the upper box is the next bullish target is price decides its time to go. Patience is key to letting these time frames roll around and let the next cycle begin. But most day traders are too fixated on the 1min and 5min chart with the little candle ticking away on the hard right edge of the screen driving their decisions. You cannot catch the bottom or top of any move so let price move and gain support if it is going in the bullish direction and let it hit resistance if it is going bearish, then soon after you will see if pro money is interested, or of the move was nothing more than a fake move.

Monthly chart first.

Weekly chart.

This is getting interesting here, I left the middle grey box so you can see how price is reacting. We pierced the upper part of the box and then came back down into it and closed the week with a bullish candle where the tail touched near term support (on this time frame) and the body closed at the top of the box. So far this is nothing more than a pull back with no proof yet of continuation or the start of a bearish move. What I see is the bulls still control this pair. It is a good place to watch carefully for an entry on a lower time frame.

Daily chart.

Once you get a feel for the pair long term it is time to get closer into the daily price action. The grey box to the left is the same box you see from the chart above. The box to the right is where this mess will sort itself out. There is an 84 point range where the fight will be conducted and you can see from the down arrow to the left of the box we saw a large bearish candle that took out historic sellers....relatively historic because on this time frame its all selling from only a few days ago. That bearish candle closed strong with a long body, but with a tail and this came about by buyers. Knowing buyers are active in that area it is a great place to hit day traders with a fake move. The market was gapped down, closed with a tiny bearish candle and because the buyers were taken out and day trading bears now in the market price had to drop away. The next day shows continued selling and pro money interested only after the shake out where the bulls took back control. If bears were in control we would not see a major reverse in price in one day and price close at the top of the candles range and above the previous and highly bearish looking candle.

The next day saw more buying and the next day again a bearish candle but its body closing within the 3rd last candle. The bears are not in control. Finally the last candle where shows no interest from anyone and price closed still within the range of the 3rd last candle. The range of the grey box is where the action will play out and take note of the candle arrowed, there are no sellers in large numbers within that area, which makes it much easier for price to rise. You should also know by now that selling takes place from higher prices and not lower price. The setup for a major move is not something that should come as a surprise, all is planned well in advance by professional money.

What we can say for certain is that the bearish move did not result in lower prices after the big bearish push. It could be there is too much buying, but speculation and what you think looses money. Is is far better to trade what you see and only trade quality setups where the higher time frames shout loudly about direction.

4hr chart.

 A closer look at the price action shown in the right most grey box from the above chart. You can see the interest from the bears has dried up, any attempt to push prices lower has been countered by buyers which had to use little effort (money) to hold price at these levels. I drew a new box which is yet a range within a large range, the markets are fractals of the various time frames and there are trading styles for every time frame and pocket.

In case you have not worked it out yet, the two blue lines are near term targets and also support and resistance. Which ever one breaks and is retested later on, the main move takes off from there. However not all is a 100% deal in trading and you may not see a retest with enough interest in taking price back, its a call you have to make as you develop. Note the range values I gave, thats a lot of heat to take if you get in too early. Let price action guide you.

1hr chart.

Now we start getting into the noiser side of trading and you need to develop and good eye before venturing to the 1hr and lower. It is easier for pro money to reverse price and play all sorts of games from the 1hr and lower in order for them to gain cheaper prices for their intended move.

There are three clear groups of buying came in to support price, can you see them?..if not, put some time into price action research. The white box is a small range where 1 and 5min scalpers will have great fun and high heart rates playing the range. Good luck to them, you wont find me at that game.

The longer amount of time price spends in a range, the more spectacular the break will be when it comes. There is a lot of money keeping price up and keeping price down, someone (many) will have to be funded well enough to retain their positions and push price out of the range in their direction, and hold the tide against the other side when the pull back comes, but if they manage to do this the flood of stops and new orders to help price move even faster in their direction will be the ultimate pay off. We are at a price area of interest and there will be plenty time to get on the right side of the move.