Monthly chart.
This is my ten mile high view and we can clearly see price has reached into high time frame significant supply and the shorts clearly visible. The reaction was clean and swift on this time frame and no hesitation. A nice spike formed at the top where the previous bullish move trapped many longs. If you look at enough higher time frames you will see this is very common place, yet people get taken in by their greed.
Below I have a demand box where we expect buyers to step in. No rocket science in any of this and simple observation of price history. One question I have for is, do you have the patience to wait for this and can you see the turn happening in real time. Or maybe your brain is wired to tell you, the turn I see is not real but a fake move because has been in such a strong up move.
Take a glance at my other posts, pro money sells into higher prices and buys into lower prices. The higher the time frame the more money will be involved, thus the move will be greater.
Weekly chart.
Here the short selling is very obvious after the fact, but how long does it take for you to accept price is in bearish mode?...how many pull backs will you wait for an entry?
Can you see how the price candles close with longer real bodies and the bullish pull backs are small candles?
Price is currently at the spot where old supply was broken, and broken supply becomes resistance in the classic sense. But we are uninterested in classic book teachings and more in actual fact shown on a price chart. It helps to think as pro money thinks, look at the last few candles, there is a lot of selling in there and a lot of opportunity to pull the price back until it gets closer to the point where it fell. Why leave easy money laying around when the herd who will happily follow any bullish activity for a few days?
The blue lines are to guide your eye to where tests came in to see will the move up hold and get better long prices if it does hold. On the way back down price can often seek to weed out remaining orders and those areas are only broken quickly is supply outweighs demand.
Daily chart.
Top line shows supply and bottom line shows where nearer term supply was broken. If you look carefully you will see price has touched the level where the broken supply was last tested and given it was end of day/week and ideal place to close out.
The left most tick mark was a test of broken supply, and the lack of sellers tell the story for taking this long soon after. Given we know on the higher time frames there is significant supply over head we have to be careful with long orders held. In fact if you look at the blue lines you can see how deep price had to retrace in order to keep the bullish move going. The middle blue line and above is where pro money was changing course and the periods of consolidation was getting longer. On the top most blue line we hit over head supply and price fell off sharply and when it retracted the change in sentiment is very clear.
There is one future unknown which will cause some frustration when trading the Euro. The ECB have taken to buying more debt and will also print money. How deep they will allow the Euro to fall is anyone's guess and where they will step in. I am sure it will happen totally by accident at some major level!
4hr chart.
I zoomed out just to show some well defined trading. Given we know we are in a down trend now and price fell sharply and more money can be made by getting back closer to the origin of a move, we can see a nice drop off from new supply and price is then bought into to force a move back up. It reached the new supply with highly emotional strong bullish candles that will have the herd throwing buy orders in the market. All this done was allow pro money sell into those and let price fall back into bearish mode which is where it was all along. After that supply area was hit you can see how price had no trouble in breaking support because the support is not valid when the bigger picture comes into play, as it has to.
Another 4hr chart.
This is a small addition to the above chart to show you what happened. The bullish push on the left was the false move to help get price back to near term new supply. Price hits supply over head and the move away was clean and unobstructed. As price hits the bottom of our fake support, there was a small bullish move which was nothing more than supply/demand traders getting in and ultimately getting taken out. These reactions are common place all over the charts and on all time frames. If you dont keep the high time frame picture in mind, this will also happen to you.
As price broke the fake support there was not as much as a glance back to test, a clear sign of over whelming selling and it took some time for the pros to slow the sell off. This is seen in candles with tails indication buying, but the buying is only designed to slow and not reverse. Once price is slowed enough and lower time frame day traders now see a bullish opportunity at least into the nearest supply area over head, and this is perfectly fine as long as you are aware that when the bears return they will come back with great force and you will not get much if any warning.
Some profits will have been taken in that area too and additional short orders placed.
In all the euro gave a great weeks trading which multiplied accounts far and wide. To those who emailed me and asked about help on getting taken out, only to see price go where they expected it to. There is only one thing I can add.
You have to understand that the pull backs can go deep, the Euro used have a 66 point pull back which was close on a good days move. If you want to soak all that up you have to trade much smaller lot size. A standard lot with a 66 point pull back is a loss of 660 plus the spread.You dont need to trade a full lot to make money, even .2 of a lot gives a good income once you learn to apply it correctly and let the lower time frames roll over and get in as a pull back ends. You wont get the entire move, but all you need is a good piece of it and set a stop to where you can afford it.
The pull backs on lower time frames will either show there is support for the move you see, or they will break it. If they break it this doesnt help pro money either and so you have better chances when an area holds. It should also be crystal clear that price is moving again. When a 5 or 15min chart is showing a move, it wont trouble me to wait for half a day or longer to get in on the next pull back once the larger time frame supply or demand is far enough away.
