According with the previous analysis, the volume’s “type” changed from demand to supply. Also, according with the previous analysis, on the level of the breakdown of 1.124 it was a great opportunity for sell on TF M15 with ratio risk: profit of 1:4.
In point 1 there was a combination of turning bars, which together can be seen as “Up-Thrust”. This is a significant signal of the weakness. At point 2 – the successful “No Demand”.
In point 3 and 4 these were successful “No Demand ” again, which confirmed the weak character of the market. In point 4, the signal can also be regarded as “Up-Thrust”. The low volume and narrow spreads suggest that supply has overcome demand.
In point 5 – two bars, one of which looks like an”Up-Thrust”, and the second – the breakdown of the support level of 1.124.
In addition, the weakness of the market confirmed the signals from TF H4: down bar with high volume in point 1, “No Demand” in point 2, followed by a decrease in prices, “Up-Thrust” in point 3 and the breakdown level of 1.124 in point 4.
Suggested Strategies
Consider only sell if the price will approach to the level of 1.124 and «No Demand» bar appears. Also, consider sell if the price breakdown the last low and «No Demand» bar appears. These should be searched in a lower timeframe.
Dynamic trend: Turned up
Background: W1 – weak; D1 – weak
Phase: Accumulation
Yen Daily Trend
On the daily timeframe there was bullish activity (signs of accumulation). In point 1 there was “Selling Climax” on a very wide range and very high volume. In point 2 there was a “Test” with a high volume. The market is not ready for a long-term upward trend, as the volume in point 2 is high, and the «Test» has failed, thus showing the weakness of the market. The accumulation continues.
Yen Hourly Range
On TF H1 in point 1 there was a “Shakeout”, followed by up-bar with a wide spread. The volumes were very high. Point 2 was the successful “No Supply” followed up bar that tells us that demand has overcome supply.
In point 3 it was a “No Supply “. This low volume in this spot, shows lack of the interest from the professionals to breakdown the low of the range.
Suggested Strategies
The end of the accumulation phase in the medium term should witness the breakdown of the level 101,150. At the moment, VSA is showing supply, and we may see a correction to the 100 level again, which may give a long opportunity. It’s important that the price doesn’t close below 100, as that would mean that prices will probably test the low at 99.5.
It’s a widespread notion that tick volumes don’t represent real volumes and so they are too unreliable to be used. This new article looks into the numbers to reach a conclusion about their reliability:
This is the third of a series of posts about EURUSD’s trend. In last Monday’s analysis, the point [1] was regarded as the selling climax. However, the subsequent down-bars had reduced volumes and narrow spreads and further “No Supply” in point [2] showed the lack of interest on lower prices from the Smart Money.
In point 1 and 2 there were two strong “shakeout” with a high volume and wide spread. The result – price increases.
In point 3 and 4 there was a change in price/behavior. It became bearish (i.e. volume growth leads to price decreases). Also, on the H4 timeframe, the down bar with high volume in point 1, “No Demand” in point 2 and the further price decreases on the show the same weakness.
Suggested Strategies
Consider selling if the price breaks the level 1.124 and «No Demand» bar appears. On the other hand, if the price breaks-out the level 1.13 and «No Supply» bar appears, a long should be considered. The lower timeframe can be used to search for the «No Demand» and «No Supply».
Since the last analysis, EURUSD did make a downtrend after the news event, but the volumes dried up, and a rally began. On the 2nd correction, there was yet another consolidation on low volume, and the price would break the long-term resistance at 1.123 in the London session. Since the breakout, the market has continued the rally, but on the last days some supply has appeared, which may mean some big traders are starting to take profits, but not necessarily supporting a down move just yet. The break of the up trendline on good volume would make it more likely there is distribution going on, and in my view, it would give a short position possibility.
Dynamic trend: Down
Background: W1 – weak; D1 – neutral
Phase: Distribution
In point 1 there was Buying Climax on high volume. The next bar was a down bar, which showed selling by the smart money.
In point 2 there was an Up- thrust. If the spread is narrow (as in this case), then the value of this signal is not great, but taking into account the weakness in the point 1 and the previous up-bar with a large volume and a narrow spread, it informs us that the supply has probably overcome demand.
In point 3 there was a top reversal bar. Maximum of the down-bar above the high of the up-bar, but the volume lower, indicating weakness.
In point 4 more reversal bars, with VSA signaling supply.
Selling on the distribution phase is risky, since the market doesn’t have any clear direction and is prone to shake-outs of the highs.
Suggested Strategies
Consider selling using a sell-stop order when «No Demand» bar appears (riskier). Or a sell-stop order when the price breaks down 1.1130 and «No Demand» bar will appear (less risky).
