Dear Blog readers,
We’ve just launched a video that explains the Dynamic Trend Setup, make sure to check it out! It’s also posted in the page of the Dynamic Trend Setup, below the charts: https://www.analyticaltrader.com/trading-setups/trend-trading/dynamic-trend-setup/
EURGBP has shown some considerable supply on the same day as it broke the support. This earlier supply volumes were only matched by the apparently strong volumes near the support, at the beginning of the Asian session at 4th August. I say apparently, because we have to take into account that prices were nearby a previous support, and in these areas this can be just volume from retail traders buying simply because there’s a support nearby.
As the prices broke the support, with moderate volumes on the mid of the Asian session, there was a short opportunity. As prices rallied on low volumes to the broken support there were other possible entries.
There was later in the European session a strong demand signal, and just 2 hours later the market turned on yet more demand signals, this time even stronger. On the break-out setup, as in the nearby S/Rs setup, once you moved your stop-loss to break-even, you could also wait for it to hit TP instead of exiting on the first Demand signal, as in these setups, when the market trends, it trends strongly. This contrasts with other more scalping-oriented setups such as Dynamic Trend, where you should exit right in a strong signal.
In March and beginning of April, while there were plenty of bad news for the Euro, with some commentators even speculating the Euro-zone would break, the professional money was actually accumulating. They do this using the added liquidity of people selling in panic, which allowed them to buy Euro’s without making the prices go against them. This can be seen by the green dots (Major Demand) of AT – VSA, and the very high volumes in that area.
Since then, prices have rallied and are now near the up trendline. It could see higher prices if the current downtrend in the lower timeframe’s is broken, and so it might be useful to check how’s H4 doing.
The down trendline was recently broken, but as the prices rose above it, the volumes dried out, in a clear demonstration of no demand. The last bar finally rejected the down trendline, on very high volume (red bar). This is bearish for the moment being, and I’d like to see this trendline being broken to take a long position.
There was some buying on the recent dip shown by the three dots (Oanda), and after the dynamic trend turned up for the 2nd time, there were 2 low volume bars showing temporary lack of supply. The first target is the blue dot at 137.3, while looking out for weak supply/no-demand signals that could turn the prices to the zone of previous buying at 133.3.
AUDUSD has shown several weak signals approaching the down trendline, which was a confirmation that the downtrend was to continue. After some strength on the end of the US Session at 15/July (blue dot), the market reversed and it rallied to the trendline once again. Upon reaching near it, the market tested for demand in the market, by marking up the prices and waiting for activity to show up. The volume was relatively low, below the average, and the prices failed to rally, which means the No-Demand test marked by the pink bar, failed, and there was lack of demand in the market.
Shortly after there was an alert on a trendline nearby, and the price hit the first target already, which guarantees we’re not losing anything in this trade. Before the downtrend continued, there was a 2nd similar alert. For a future short entry prices must come up near the trendline again, to guarantee a good Risk:Reward. Also look out for strong signals in this price area, because of the 15/July strength, which could turn the trend.
In this trade there were 2 major mistakes:
1. There were demand signals before at this price level, so any short should be avoided, unless the price had made a very significant rally.
2. There was no weak signal before the trend change. This is necessary to guarantee there is some smart money support for the down move
