Due to the uptrend, the bias before NFP release was bullish. Already twice had the price tested the major support on 1.0825 level, and bounce back up. It shows that professional money isn’t interested in a down move so far. After testing, they markup the price and break 1.0925 level on Thursday.
EURUSD H1 Volumes
And finally by using NFP as catalyst which is showing us strength on USD, shakeout candle happen with significantly volume increase. If we keep following the price until it reach to 1.1000 level, we can see there is ultra high volume when the price tried break that level. Why the volume appears as ultra high? No other reason because smart money has to absorb all the sell orders on that level and keep pushing the price up. For this week, most likely the smart money will continue to keep the bullish trend.
Following the last update on GBPUSD, shortly after there was a breakout with a volume above average, with strong signals behind. This is seen in zone (1).
8 hours later, there was a churn down bar (2), which was an indication of more buying above the broken level. The long position was taken right after, with the stop-loss below the break-out bar’s low, and the take-profit below the next resistance. After a short correction on low volume, prices kept on rallying, until reaching a climax (red) bar, and VSA showing a supply signal next to it (3). This was a +148 pips move. There is where the trade was closed. Since the background is now weak, there is now a sell signal if the previous low is broken.
Update 7th March: After the low on the supply bar was broken, the prices went down on wide spread, but low volume, which should have been the warning sign to tighten the stoploss. The stoploss was hit above the nearby resistance at 1.42507. Total: 148 – 53 pips = 95 pips
Volumes and Reversals Trading GU
GBPUSD
After the confident 1.42450 and 1.40650 support breakout, prices haven’t managed to make the same thing with 1.38460 support, and now British Pound market tests the 1.40650 resistance level.
During previous 2 weeks bearish market confirmed its sentiment:
In point 1 prices tested 1.43890 resistance level which showed the interest from institutional players and was marked by VSA Indicator as W1 supply signal. Before that, in point 2, market showed, that there were no strong signs of the imbalance near 1.42450 support level which meant, that big players were not going to change its short positions to long ones.
There was a 1.42450 support level breakout on high volume which again showed initial sentiment of the market. As the result of that breakout, the 1.40650 support level went through as well, and the steady downfall of the market stopped at the level 1.3846.
Points 4 and 5 suggest that minor demand signals and low volatility on the bottom of the market is not the sign of the bearish trend finishing. The beginning of a sideways is possible, which is confirmed by neutral background.
Due to the absence of stronger demand signals on the bottom of the market, now it is too early to speak about the change in GBP market sentiment. In current situation it is important to see how the market will behave near the 1.4065 level and above it, if such situation happens. In case of a supply signal near the resistance, or no demand with a volatile down candle after it, it’s possible to take a short position, but only on weak background.
If there is 1.40650 breakout candle on high volume, it will be the time to start searching for long positions.
GBPUSD H4 – Downtrend and VSA
EURUSD
Having tested the 1.10050 short-term support in the point 1, the Euro went above 1.10440 level, and revealed, that there was no smart money interest near the 1.10684 long-term resistance, which was confirmed by low volumes in the point 2. The point 3 is the place where prices went beyond the 1.10440 level, and above average volume on down candle with the supply from VSA indicator showing the bearish sentiment of the market.
EURUSD – Downtrend and Volumes on market Bottom
In the point 4 there was the 1.10050 and 1.09590 support breakout on high volumes – the good sign of confident bearish trend. Next evidence of down sentiment of the market is the point 5, the place, where prices successfully tested 1.09590 level resistance – it remained unbroken. Moreover, it was the good place for big players to add to short positions – that’s what they did, as the high volume volatile down candle showed. After that the 1.09150 level was went through, and the market eventually paused its down motions by 1.08380 level.
The current market situation can’t be called the end of the bearish trend due to the absence of the strong demand VSA indicator signals and to weak background.
Undoubtedly, there are demand signals in the point 6 and 7, but the volumes are not too high to be stopping volume and the up candle volatility after it, is around average.
So in the current situation the full picture will be seen at the 1.09150 resistance level. In case of high volume breakout candle, previous short positions should be closed and possibly reversed for long positions. If there are supply signals at the 1.09150 resistance level or low volumes near it as no demand signal, it’s possible to open new short positions or to add to current shorts.
The 4-hour chart of the USD/CHF once again shows a minor supply signal, which, taking into account weak background of the market, may mean that the bearish trend will continue. Such amount of market supply may lead to the further down motion, due to which the price may fall to level of the previous support around the 0.966. On the chart there are three important zones, which shows the activity of large players. The first zone is the beginning of bearish trend. There are several supply signals both on the current and on the daily chart. Next, after few short candles with low volatility, comes another bearish signal (minor supply), which leads to the subsequent rapid fall of the price.
USDCHF – Accumulation, Demand and Tests
Then the price almost without any stops passed to the next, second zone, where we can see the highest volumes, which were present in the market in recent months. In the H1 there was a minor down reversal, marked by Major Supply signals, but after more demand seen from upper timeframes, the trend finally reversed.
In the 3rd zone the price reached the resistance level in the area of 0,999. Here we can see that volumes usually don’t exceed its average value, so we may define this situation as lack of demand. There is however one signal in favor of buyers (no-supply test near the 0,986 level), and the background is strong. However, higher amount of bearish signals, which were detected by VSA Indicator, and a successful no-demand test (pink bar), confirms that the market is still weak. In this case, if the background turns weak, the possible point to open the short position would be below 0,995 level and stoploss above the 1.000. Still we must remember that there were large volumes and strong demand signals in zone (2), so we should be alert and prepared to act quickly in case the big players keep accumulating and open new buy positions.
Sterling (GBPUSD)
GBPUSD H4 – Trend and VSA
From the beginning of February we saw a downtrend on GBP/USD. After 16th February’s support break out on level 1.44000, there was a bear sign on the point 1 and 2. In the point 1, there was a supply candle near mid-term resistance level, which was detected by VSA indicator. Next, a high volume down candle appeared 22 February on the support breakout which approved the bearish sentiment. Then the signs of bearish work were evident in the point 3 and 4.
Point 3 was the first 1.41000 resistance test on high volume, and in the point 4 market showed that there was no demand above the resistance level, but the price is attractive to add to current sell positions or to open new ones, and prices fell sharply breaking out 1.39000 resistance with the support of opening sell positions of institutional investors and other big players.
The situation near the 1.41000 level is represented in top right corner of the screen, where new opening sell positions of big players caused upthrust – breaking the resistance up and then coming back down. After this dynamic trend turned down and it was the best opportunity to open short positions.
There are no bullish signals in the market, so trend tends to continue its step down motion. The possible position opening point will be the area near 1.39000 resistance, so in case of bullish intention absence at the bottom and supply power / no demand signals near 1.39000 level, sell positions are likely to benefit. Resistance tests and upthrusts will be good signals in this case.
EURUSD
EURUSD – Trading Range and Breakout
During the last 3 days, from 23th February, prices were trapped between 1.10450 resistance and 1.10000 support. Flatting within these levels, big players tested the market for the opportunity to continue the descending motion. 1 and 2 points were the resistance test places, which was shown by the indicator with supply dots. Point 3 was the place where institutional players saw that the market was ready for a small up walk, which showed on the chart as spring in point 4( peak near the bottom edge of the flat range, with prices dipping above the resistance and then coming back down again to below the resistance). After the low volumes showed that there was no demand above 1.10450 resistance level, and prices streamed down signed as low supply by the indicator purple dot, and break out the support on high volume(point 5) which confirmed bearish sentiment of big players.
The high volume down candle after the no demand above mid-term resistance level was a good sign to open sell positions with the stop loss above point 4 candle top. If there are no bullish signals such as the culmination of purchases( prices going down and up on huge, extreme volume), it’s possible to search for signs of supply 1.10000 resistance level for a short entry.
After a break-out of an important support at around 9300 on 8th February, DAX, along with the other European and American indices, made a significant retracement and rallied above the break-out price. The chart of M15 below shows the second rally, with prices reaching the previous high.
Trend and Volumes on Dax
During this uptrend the background was strong, and any supply signals that appear need confirmation for a short to be taken. These can mean various things – some traders taking profits, short stop-losses being hit at important levels, or just selling that had no follow-through among other institutional traders. Counter-trend trades should be taken on a lower timeframe, using VSA signals from the above timeframes, so you’re more likely to spot an exit bar, such as a demand signal.
Over the next week, it’ll be interesting to watch if there is more supply at this level, with DAX breaking the up trendline on the intraday with good volume. On the more long-term side, to watch if prices falls below the break-out price.
