Yen Near Support, Breaking Out
In the last post, we suggested to buy USDJPY in case low volume down bars (no-supply bars) showed up near the previous resistance level at 111.8. Many low volume down bars appeared at those prices (point 1), which provided the entry opportunity. The prices didn’t break 111 to the downside, and so, we maintained our bullish view of the market.
The trade was closed in point 2, on a supply sign. It was also getting near the previous selling zone at 113.5, and it ended up being the starting point for a reversal.
After a brief correction and low volumes on the bottom, the prices kept on rising and soon reached the long-term resistances at 113.8, and 114.5. A breakout of this last resistance at 114.5 (point 3) could provide another long opportunity, as long as one is alert for potential reversal signs, as the trend is already somewhat extended.
Dynamic trend: Turned up
Background: W1 – weak; D1 – strong
Phase: Markup
Support: 111.80; 111.00
Resistance: 113.60
USDJPY Hourly 28-11-2016
Analysis
Point 1: There was a breakout of the resistance level with a wide range and a high volume bar. The following up-bar confirmed demand. Moreover, on a smaller TF we can observe a successful test after this breakout, which confirms the strength.
Point 2: we can see a “Potential stopping volume” with an average range and a high volume. Because the subsequent bar was a down-bar, this maneuver is not confirmed, however, we should take into account that the strength comes on down-bars, and in the case of a successful test level around 111.80 and 111.00, we will be going long.
Suggested Strategies
Strategy 1: Consider to go long if:
- Price pulls back to the support level 111.80 or 111.00 and;
- “No Supply” appears (down-bar with a narrow range and a low volume) and;
- The price reverses.
Strategy 2: Consider buying if:
- Price breaks out the resistance level 111.60 and;
- “No Supply” appears.
Strategy 3: Consider selling if:
- Price breaks down the support level 111.00;
- “No Demand” appears (up bar with a narrow range and a low volume).
Tips
You can search for «No Demand» and «No Supply» signals on the lower TF.
Dynamic trend: Turned up
Background: W1 – very weak; D1 – weak
Phase: Markdown
Support: 1.055
Resistance: 1.066
EURUSD Hourly
Point 1: There was a potential “Selling Climax”, with a very high volume and a wide range. The subsequent bar was an up-bar, which indicated buying pressure.
Point 2: Represents a “test” with low volume and a narrow range relative to point 1. The following up-bar confirmed the success of this maneuver. Low volume when breaking out the latest low, indicates no selling pressure
Point 3: There was a “Shakeout” with a normal volume and a wide range.
Conclusions: The recent action is bullish, and indicates market strength. However, we should wait for the confirmation of the 1.066 level”
Suggested Strategies
Strategy 1: Consider selling, if:
- Price pulls back to the resistance level 1.066 and
- «No Demand» appears (up-bar with a narrow range and a low volume) and
- Price reverses down.
Strategy 2: Consider selling if:
- Price breaks down the support level 1.055 and
- «No Demand» appears.
Strategy 3: Consider buying if:
- Price breaks out the resistance level 1.066 and
- «No Supply» appears (down-bar with a narrow range and a low volume).
Tip
You may search for «No Demand» and «No Supply» signals in the lower TF.
Dynamic trend: Up
Background: W1 – weak; D1 – strong
Phase: Markup
Support: 107.00
Resistance: 107.80
USDJPY Markup
In point 1 there was a “Shakeout” with a wide range and a very high volume. Following up-bar confirms buying. After a period of growth this price movement shakes out weak holders.
In point 2 there was a “Test after shakeout” with an average range and a normal volume. The volume was significantly lower than in point 1, which indicates the absence of selling pressure. The growth of prices after the test was confirmation of success of the test.
In point 3 there was a bar of the breakout of the trading range with a wide range and normal volume. The relatively low volume of points to the decreased interest of Smart Money to increase prices. Possible imminent market reversal.
Suggested Strategies
Consider buying if the price pulls back to the 107.00 support level and “No Supply” appears (down bar with a narrow range and a low volume). Consider selling if the price breaks down the 107.00 support level, and “No Demand” appears (up bar with a narrow range and a low volume).
You can search for «No Demand» and «No Supply» on the lower TF.
Dynamic trend: Turned down
Background: W1 – weak; D1 – weak
Phase: Markup
Support: 1.100
Resistance: 1.106
EURUSD Hourly
HOURLY
In point 1 there was an up bar, that looked like a “Shakeout”, with a very high volume and an average range. This is a pattern that shows demand, and on a critical point, approaching the weak congestion zone ahead.
In point 2 there was the resumption of buying after prolonged shaking out on a downward trend.
15 MINUTES
EURUSD 15 Minutes
On TF M15 in point 1 there was a “No Supply” bar after signs of strength and resumption of the uptrend. This was a good point for a long position.
Suggested Strategies
Consider buying if the price breaks out the level 1.106 and «No Supply» appears (down bar with a narrow range and a low volume). Also consider buying if the price moves down to the support level 1.1, there is a sign of strength and «No Supply» appears. Consider selling if the price breaks down the level 1.1 and «No Demand» appears (up-bar with a narrow range and a low volume).
You can search for «No Demand» and «No Supply» on the lower TF.
Dynamic trend: Turned up
Background: W1 – weak; D1 – strong
Phase: Accumulation
USDJPY Trading Range
Since the previous analysis, the price continues to remain in the trading range 103.17 – 104.30, with congestion zones formed in between.
Point 1 was the breakup up-bar of a strong congestion zone. In the 15 minutes timeframe, there were also clear signs of a bullish movement.
In point 2 there were a series of up-bars with a very high volume. Usually up-bars with a high volume and a wide spread are signs of weakness, but the weakness revealed here was tested in point 3.
In point 3 there was a “Shakeout” with an average spread and a low volume, which can also be regarded as a successful test, indicating «No Supply». We should expect further upward price movement.
Suggested Strategies
I recommend buying near the support level of 103.17 after the appearance of significant signs of strength, the beginning of an upward price movement or the appearance of “No Supply”. However, if prices continue to rally, a break-out of the 104.2 level would confirm the buying (accumulation) seen behind. For the time being, prices are just below a weak congestion zone, and it’ll be better to stay in the sidelines, in the hourly timeframe.
