First up we look at the monthly chart.
I placed three red horizontal lines to show support and resistance areas. All look good to my eye and as seen with the upper line, there has been one touch on this as price fell. The reaction was a lower time frame bullish move and the message to keep in mind is that it was a reaction to unfilled orders and not a change in trend or sentiment.
I have a blue line showing the strong bullish intent taken off the base of the lowest S/R line and the cheapest price for pro money to push this. The box is where the retest came in and was early and unclear until the tiny red doji candle closed. To most traders that showed more upside and potential for breaking through the mid red line, and after a short retracement price pushed strongly up through and it was only a matter of waiting patiently while the pro's shot for the moon and the herd as you can clearly see responded. The pro's had all their work dont and the target was hit hard and the profit taking and closed positions came in rather violently.
Weekly chart.
I have drawn a red line to show near term price reaction and a place where further shorts may be possible. The lowest line is from our above chart and given the mess price made when it left that area, there was no intention to push higher and the long game is over.
The blue line again shows the rush of emotion fed to retail traders to get more longs for the pro's to sell against. Any time you see price in this parabolic move, get ready to bail!
Daily chart.
A few more red lines to help concentrate your brain. Of note is how price blew right through the candle where I have placed a tick. With so many short orders flooding in, and at the end of the day/week and month, we can get strong moves happening and positioning for the next week/month/quarter.
The blue line would be a good place to get traders into short lived longs, it has been untested and it is not unknown for price to get pushed to where it gives best effect to sell into. There are no signs of any additional bullish activity coming in and the unwind and new positions take time to get itno the market when major market turns are happening. We wont know for sure if this is so until we can see clearly breaks of major support and no buyers stepping in where any up move is sold into either by absorbing the buyers quickly, or over time. It is a matter of how much short orders remain to be filled before the big push.
4hr chart.
First thing to note here is how deep price had to go back down into old buy orders before it had enough push to reach the target. The candle with the tick is now even more obvious in what its function was, it got retail buyers involved for a short period of time and gave pro money four good days to close out.
The candle lower left is where we may see something happen, but given it is so close to short term target below there is the possibility of it being of no interest. The lowest red line is where the real action will likely take place.
1hr chart
Depending on how the market moves next week, any pull back in the near term has a small box above current price for adding more orders. Nobody knows how this will play out until it happens and for the moment we make ourselves aware of where are places to look for in the event of a pull back or short term reversal and knowing the higher time frames are showing bearish strength.
Yeah I was following the EG last week and I too was one of the traders that was expecting another bullish move. We were in monthly demand with a close above weekly/ daily resistance and a clean area of buying on the daily/ 4hr source of the last leg up. The only things that concerned me were the demand removing spikes that were best seen on the weekly charts and the relative weakness of the Euro across the board as seen on other pairs. So what a surprise I was in for when this pair just collapsed. I wish I could get my hands on those new hindsight spectacles they are selling. Word on the street is they are 20/20.. Luckily, I managed to get out of my long at BE+ due to lackluster/ unconvincing PA.
ReplyDeleteAlso, out of curiosity, on the last reply you gave in the previous post you spoke of scaling into a nice position before the weekend. Was this the pair you were speaking of? The only other pair that seemed obvious for some longer term scaling in my novice eyes was the USDCHF with a nice daily break up/ retest and room to run to 0.9229. It didn't reach deep enough in the 4hr area I was waiting to buy at, so I passed on it..
Howard,
ReplyDeleteWhen the higher time frame areas get broken this brings about a new view we have to make ourselves accept and look for the break to become solid. As much as I tried to show this in the past, many people still refuse to trade what they see, rather than what they think. I wont insist on looking for a direction to trade unless its clear pro money are going in that direction. The emails I get have a common thread in that.....the move came outta nowhere.
My trades last week were all on the euro. When key areas were broken it was a sign of more down side until we hit the next pocket of demand and given the weakness showing up, it is possible we will see more short orders to more than soak up remaining longs. But of course we wait for those areas to prove it true.
Trade small position size if you want the higher time frames to guide you, then pull backs wont look as hard to take and there is the additional possibility to scale in as the price goes in your direction, there will always be pull backs to let you get more entries.