Dynamic trend: Turned down
Background: W1 – weak; D1 – weak
Phase: Accumulation
In point 1 there was a combination of two mixed bars. The first – “Shakeout”, with a relatively high volume compared to the last 40 bars; the spread was wide, all of which can be regarded as the accumulation by the Smart Money. The second bar was an up-bar with a wide spread and very high volume which showed supply, since prices didn’t continue to rally.
Further prices decreased, but on declining volume, indicating a lack of interest in lower prices by professionals.
In point 2 there was a “Shakeout”. The volume was significantly lower compared to point 1, which indicates the reduction of the number of sellers.
In point 3 there was the combination of the two bars, which together can be considered as a “Test”. The volume was relatively low. The next bar was an up-bar, which was a confirmation of the success of the “Test.”
In this situation, it’s recommend to refrain from deals due to the mixed signals. If there is a further down movement on low volume to the 101.900 level, there should be a long opportunity with the target on the trendline. The lowest support is at 101.500.
GBPUSD Breakout
In the last post, I noted there was strength behind that had been sustaining the prices, but further confirmation was needed to enter in a trade. In GBPUSD, the confirmation was the weak congestion zone being broken, but as prices were approaching it, there was some supply shown by a weak congestion bar. The reaction rally was on low volume, showing there wasn’t enough ‘gas’ to break the resistance. On the London session, prices broke out the lower zone at 1.316 and the support at 1.313 in the same hour, on very high volume, which was the definite confirmation of a bearish movement ahead.
In the 15-minutes timeframe, the volume spike at the breakout usually signals further down movement ahead
While this market sell-off goes on, there isn’t much that can be done; there should be a consolidation or a price rally to start planning a trade in GBPUSD in the intraday charts.
The Pound has been showing strength in the volumes lately, on the major pairs, with congestions showing a demand zone being formed at these prices.
GBPUSD
In GBPUSD the prices just bounced off the demand zone, which were the first long signal, due to the strength behind. The target is at 1.326, from where a breakout can be traded on a lower timeframe. Alternatively, if there is a correction onto 1.319 on low volume, there can be another long opportunity.
EURGBP
EURGBP is showing some selling behind, which is good for the GBP. A trendline break would give a trend changing confirmation, for a short trade.
VSA + Congestions EURGBP
GBPJPY
GBPJPY is ranging for a longer time than GBPUSD, and didn’t go down as much as GBPUSD did recently. There is buying behind showed by VSA and congestion bars, along with a strong congestion zone. The plan is to look for a trendline break.
Dynamic trend: Turned up
Background: W1 – weak; D1 – weak
Phase: Markdown
Selling In EURUSD
In point 1 there was an up bar with a very wide range and high volume. The next bar was a down-bar, which indicates the predominance of sales over buying on the previous bar. VSA also identified selling in this area.
In point 2 and 3 – a series of “Up-Thrusts”; in point 3 the bar with a very wide spread and high volume, which emphasizes bearish interest from the smart money.
In point 4 there was a combination of reversal bars. The first bar was up-bar with a very high volume and wide spread, but close price was in the middle of the bar, which indicates supply. The second bar had a very high volume also, and it confirmed the sales on the first bar as it closes below the minimum. Subsequent downward movement was on low volume, that showed a lack of demand. Analytical Trader also identified selling in this area.
In point 5 these was a confirmed “No Demand” – a great point for a short.
Suggested Strategies
In the mid of the range it’s not recommended to trade. Consider a short if the price approaches the level of 1.13 and «No Demand» bar appears.
You can search «No Demand» and «No Supply» on the lower TF.
On the previous week post about the Yen, we noticed that there was consistent buying in the hourly chart, and that a dip into the lower part of the range would give a long opportunity. This happened, and right in the next London session!
On trading ranges showing VSA buying signals, like we note on the trading guide, you can also wait for a breakout of the trading’s range high. If on the break, the volumes pick up, it’ll be a confirmation of accumulation. This is what happened in USDJPY, and since then, it has been on a long rally, until stopping on a long-term trendline.
Apart from the down trendline, the momentum of the uptrend is now fading, and there is significant supply showing up. This is inevitable on resistance areas, but still, if you’re holding a long in intraday, this is a good time to start reducing the position size, and wait for a trendline break to add into. Personally I’m holding a long daily trade, and waiting to see how the daily bar closes.
If the trendline is broken, it’ll be a long/adding signal. If supply keeps showing up on the hourly, and/or there are low volume rallies into the current selling bar, it’ll be a short signal.
According with the previous analysis, the volume’s “type” changed from demand to supply. Also, according with the previous analysis, on the level of the breakdown of 1.124 it was a great opportunity for sell on TF M15 with ratio risk: profit of 1:4.
In point 1 there was a combination of turning bars, which together can be seen as “Up-Thrust”. This is a significant signal of the weakness. At point 2 – the successful “No Demand”.
In point 3 and 4 these were successful “No Demand ” again, which confirmed the weak character of the market. In point 4, the signal can also be regarded as “Up-Thrust”. The low volume and narrow spreads suggest that supply has overcome demand.
In point 5 – two bars, one of which looks like an”Up-Thrust”, and the second – the breakdown of the support level of 1.124.
In addition, the weakness of the market confirmed the signals from TF H4: down bar with high volume in point 1, “No Demand” in point 2, followed by a decrease in prices, “Up-Thrust” in point 3 and the breakdown level of 1.124 in point 4.
Suggested Strategies
Consider only sell if the price will approach to the level of 1.124 and «No Demand» bar appears. Also, consider sell if the price breakdown the last low and «No Demand» bar appears. These should be searched in a lower timeframe.
