AUDUSD H4 – Market analysis
At first I zoom out H4 timeframe. Here I see that AUDUSD is moving in stable downward trend.
Then I draw down trendline with several touches. Price has noticed this trendline several times. It means that now this line is a resistance for higher prices, because traders will place their sell orders at the intersection of price and trendline. The area above the supply (higher) trend line is known as overbought area. Analyzing VSA signals (weak or strong) we can assume whether this break-out was genuine or not.
At the moment we see no strong signals in the chart.
Background in H4 is neutral and in D1 is weak – we should be looking for short trades.
Let’s get a closer look at this picture.
There is no selling climax at the bottom of the market (after substantial falls have already taken place). Selling climax – it is an imbalance of supply and demand causing a bear market to transform into a bull market. The volume has to be extremely high on down-moves, accompanied by narrow spreads, with the price entering fresh low ground. Also there is no accumulation area.
Here we see only 2 no-supply bars (bars in the bottom of the market with low volume). It means that global downward trend is not over yet and now we have a reaction to this trend.
When the price crossed down-trendline – we have 2 weak signals. Major supply – this is an up-thrust which happened on the news that Fed postpones rate hike.
At the moment there are no strong signals, but dynamic trend is still up (green).