In last week’s post about EURUSD, I wrote that you should look for shorts in a rally to the 1.11 level, as the downtrend didn’t seem yet finished. Prices got halfway there, with the volumes showed lack of demand near that temporary top.
Dynamic trend: Turned up
Background: W1 – weak; D1 – weak
Phase: Markdown
In point 1 there was “Stopping volume” with a wide range and with a very high volume (the highest in the last 166 bars, since the beginning of a downtrend). Taking into account the previous price movement, this volume is likely to be insufficient for a full trend reversal, though we can’t exclude a short-term uptrend.
Suggested Strategies
Consider selling if the price breaks down the level 1.0962 and «No Demand» appears (up-bar with a narrow range and a low volume). Also consider buying if the price breaks-out the level 1.1 and «No Supply» appears (down-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: Markdown
EURUSD H1 Chart
In point 1 there were a series of up-bars with a wide spread and high volume. This bullish maneuver is a «Potential Buying Climax». The two subsequent down bars confirmed the supply, therefore also confirming the weak congestion zone.
In point 2 there were a series of up-bars «No Demand». These have a special significance, because they were near the bar high of the point 1, and they were inside the weak congestion zone (the zone of previous selling). A good place for a short position.
In point 3 there were a series of up-bars ” No Demand ” with subsequent down-bar and “Up-Thrust” with low volume. Due to the weakness behind, one should look for a breakout of the congestion zone.
Suggested Strategies
Wait for a rally to 1.11 to consider shorting, if there is either more supply or no-demand bars.
Tomorrow at 1:30pm BST the NFP and unemployment numbers are being released, which could provide the breakout of critical levels in USD pairs, such as in USD/Yen.
Hourly Timeframe
USD/YEN Hourly – Trend and Resistance
In the hourly, USDJPY is on a clear up trend, within a channel, and approaching the important resistance at 104.32. The market has been rising on high volumes, and the current supply is normal in overhead zones such as this one. Depending on the NFP numbers, the breakout could go either way, and both are trade-able.
- In case the up trendline breaks, you should go to a lower timeframe such as M15 to trade it, as the movement might not be so prolonged without further rallies and tests.
- In case there is a breakout to the upside, it should be traded on H4 since it’s a trade to be held for the mid-term.
4-Hours Timeframe
Before NFP USDJPY 4H
On the 4 hours timeframe, we can see the prices are actually on a selling congestion zone, which reinforces the plan idea that there should be a breakout to trade it.
After major supply knocked off the precious metals on a sideways trend, gold prices have been oscillating, with no clear direction. Silver on the other hand, has been slightly weaker, with a defined downtrend.
Gold
Gold Daily Chart Analysis
The most visible supply bar was the wide red bar by the end of June. The rally then continued on low volume, and more supply seen by VSA signals and weak congestion bars had been appearing.
A selling zone (congestion zone) was formed from the highs at $1370, and prices have repeatedly failed to break it, which along with the low volume in these rallies, suggests an overall lack of demand.
In gold, the $1301.5 level marks the distribution range low, and so its break would give a short opportunity in a lower timeframe such as 4-hours or hourly. A rally to the downtrend on low volume could provide another opportunity to sell.
Silver
Daily:
Silver is in a similar phase to gold’s, albeit its downtrend is clearer. An up trendline was just broken, and so, it’s good to check a lower timeframe to see the recent action in more detail.
4 Hours:
Silver H4 Chart
Prices are now approaching a congestion zone, and a breakout would give a short opportunity. In the daily timeframe, a pullback to the trendline could provide another opportunity to short.
In the daily and H4 timeframes we’ve spotted a distribution phase which can give short opportunities when there is a breakout confirmation. Until the market tells otherwise, I maintain a bearish outlook on the mid-term for precious metals.
Before Wednesday’s FOMC statement, USDCAD started showing supply signs above a strong zone. On the FOMC’s statement release, there was a rally, but the prices quickly tumbled, forming what we call an ‘upthrust’, on very high volume. This is what we know to be of a good breakout sign, and breakouts can be traded when it occurs.
The trade was closed after a VSA demand signal from H4, with a narrow range bar behind already showing demand coming in the market.
Right now, the market is approaching the previous zone at 1.315, and we can see VSA showing further supply, with the background still being weak. If the line drawn at 1.311 is broken (which coincides with the latest low), it’s a good confirmation to short the market. As of now, the market is rallying, and it will still have to prove the recent supply is enough to start a major turn. Other way to confirm it, is to wait for the dynamic trend to turn down.
USDCAD Trading Breakout
Dynamic trend: Turned down
Background: W1 – weak; D1 – weak
Phase: Markdown
In point 1 there was a “No Result from Effort” bar. It’s a combination of two bars, where there is an initial rally without a follow-up. Relatively low volume indicates that there were a small number of buyers.
In point 2 there was an “Up-Thrust” with a very wide spread and very high volume. The next down-bar confirmed bearish interest of the Smart Money.
In point 3 there was “No Demand” with a very low volume and very narrow spreads. Additional factors of weakness of the market was to be found in the lowering market. This was an excellent point for sell.
On TF M5 in point 1 there was “No Demand ” and was a great place for sell.
Suggested Strategies
Consider only sell if the prices approach to the level of 1.12 and «No Demand» bar will appear. Also I’ll sell when the price breakdown the level 1.1145 and «No Demand» bar will appear.
You can search «No Demand» and «No Supply» on the lower TF.
