There is no stable trend in EURCHF (M15) and the price is moving sideways. On the above chart we have upper and lower limit of trading range. It is not a good idea to open a long trade when the price is near upper limit and you do not have strong signals suggesting that the resistance will be broken. Because it is unlikely that the price will leave trading range if there is no imbalance between supply and demand.
- At the time of entry background was weak – this is not o’k for a long trade. If we watch the price movement in this chart we see that background often turns from weak to neutral and to strong. This is because price is moving in a trading range and there is no clear trend.
- Weak signal near resistance before trend changed – this is a mistake to open a long trade in this point. Because this is a clear indication of price reversal. Also there are no strong signals which would suggest that price will continue to rise.
- Dynamic trend turned from red to green – o’k
- Long trade has to be immediately closed after Supply signal
This is a follow-up trade of previous EURUSD analysis. Price with high volume bars has broken lower line of ascending triangle (this is a good sign of genuine break-out). Later we had a weak signal (supply) near this line and price continued to fall.
- At the time of entry background was weak
- Weak signal (Supply) before trend changed
- Dynamic trend turned from green to red
- Entry in a low spread bar while the price didn’t move too far.
- Exit immediately after strong signal (Demand).
Total: + 160 Pips
On January 15th this year, when the Swiss National Bank (SNB) suddenly announced that it would no longer hold the Swiss franc at a fixed exchange rate with the euro, there was the biggest single-day move for this country’s currency in the last 40 years. Now let’s see how the Franc is doing in 10 months after this event.
Since May USDCHF movements have been limited by two lines: 1. Up-trendline which represented support for the prices (each next low is higher than previous one); 2. Resistance level (at 0.984) – it was a reversal point for the prices. Also this figure is known as ascending triangle. Each time Analytical Trader has detected strong signals near the up-trendline and weak signals near the resistance right before the price turned its direction.
Recently we had a break-out through the resistance. Then the price moved back to this resistance just to touch it and continue to move up (it happens very often when the resistance becomes support). In time of touching there was no big volume (it is called no-supply) and it means that professionals are not interested in down move – they are now bullish.
Now background is strong. The price is reaching two important long-term resistance levels: previous high and the price level which was valid before the SNB unpegged the franc. It will be interesting to watch price behavior near these levels. Look carefully for weak/strong signals and volume when the price is close to the resistances.
- At the time of entry background was strong – o’k
- No strong signals at this price level before trend changed. This is a mistake. Only strong signal + strong background can guarantee that there is imbalance between supply and demand in favor of demand.
- Dynamic trend turned from red to green – o’k
- The trade was opened in a low spread up-bar when the price didn’t move too far after trend changed – o’k
- At the time of entry background turned to strong. It means that imbalance between supply and demand is now in favor of demand.
- We have a long-term support in the chart. This support was established by previous low. Several strong signals (Major and Minor Demand) appeared as the price was approaching the support. One more strong signal here: Shake-out – wide spread down bar accompanied by high volume. But next bars are bullish and we see price reversal. It means that it was a stopping volume which contained more buying than selling. Otherwise the price would have continued to move downwards.
- Dynamic trend turned from red to green.
- Entry – when the background turned to strong in a low volume down bar.
- Exit after reaching TP level.
Total: +105 Pips
As I noticed earlier, EURUSD was moving in an ascending triangle. You see how price several times noticed the long-term resistance. Every time Analytical Trader detected disbalance between supply and demand when the price approached the resistance level (by showing weak signals: Minor Supply, Supply, Major Supply). Once there was up-thrust – a sharp up-move beyond upper limit with wide spread bar on high volume closing on the lows (Analytical Trader detected Major Supply – very weak signal). Weak holders opened long trades during this move, hoping that this was a genuine break-out. Very soon their stop-losses were triggered.
Let’s get a closer look at this chart.
Last time when the price approached the long-term resistance we had 2 weak signals (Supply and Minor Supply). This has led to a price reversal. Right before the lower line of triangle was broken we saw several high volume and wide spread down-bars. The break-out bar was also on high volume. Therefore Analytical Trader can help us to predict whether the price is going to cross support/resistance levels or change direction. We just have to follow its instructions and it will significantly increase our chances to profit in the market.
