AUDUSD – Rally After Accumulation Pattern (Follow-up)
Following the inverse head-and-shoulders with buying volumes on the bottoms (point 1), seen in M15 and mentioned in the previous post, AUDUSD reached more attractive prices for buying and resumed its rally. Upon reaching a resistance level (down trendline) at point 2, volumes showed supply swamped demand, and the market reversed. Reversals also confirmed the second one, at the highest rating sensitivity. It’s an indicator that can be used for confirming VSA signals, or to show additional likely reversal points, like the one on the bottom at point 1.
Prices then followed the down trendline, and reversed at point 3, where VSA marked a Demand signal and a thrust bar. After 2 more supply signals showing up, at point 4 the trend was again stopped. This is often the case that the market oscillates between VSA signals, and shows the importance of correctly following the volume in trading, even if relative volume as in Forex.
After the supply shown at 4, the reaction was a frail rally with low volumes, which showed no interest by large players in an up move. In the last hours, another thrust bar appeared (pink bar), which is a common occurrence where uninformed traders go long, and that liquidity is used to dump sell positions and thus bringing the market lower very rapidly during the same hour.
Looking at the big picture, AUDUSD H1 is the middle of a trading range and on a small sell-off, so it’s risky to take any position in the hourly just yet. Prices should reach Gold, a commodity that is tightly related to the Australian Dollar, has just reached a very important support located at $1209. There was a no-supply test bar at H4 which seems to have been unsuccessful, as there was no upward reaction, and so lower prices are to be expected, perhaps a shake-out of the area.