Australian Dollar went through a 90 pips fall in prices on the US session today, partly because of RBA recently communicating the reasons behind maintaining a low cash rate, with no prospects of raising it soon, and also because of the recent movements in gold, which influences Australia’s major gold exporter economy. Looking at prices and volumes, we can see the same picture – a top in very high volume and several Supply signals, without the volumes slowing down on the way down, and with a weak background.
There are 2 important zones to note in this chart – first, the distribution top, and second, a recent low which showed demand on really high volume. These were the last major professional sell and buy points, respectively, and so they should be the trigger zones to trade, either on a bounce or a break-out – the market will tell. If I see more demand signals near this area I expect the prices to rise yet again, as the professional money is clearly showing it’s buying this bottom, and not letting prices go below their last major buy point.
Control Zones AUDUSD M15
On H1, what jumps immediately to the eye is the major shake-out, which VSA marked as Major Demand; that major demand is what’s dominating this market. Looking at Reversals, we can see that on the highest sensitivity they have been showing all the tops and bottoms, and just 1 hour ago an up reversal was seen. The break of this bar’s top in the next hours would be a good buy point, and looking at M15, that would also be the break of the recent low volume up bars. The areas on M15 should be then watched, and special attention given to other reversals or VSA signals for exits.
EURUSD has recently shown down Reversals across the different timeframes. In M30, where the rating setting 7 is working best for quite some time now, a down reversal was seen 1 hour ago.
Going down to M15, given that we have seen a reversal on an higher timeframe and using the filter of dynamic trend (200), this is a zone to look for down reversals. At the very least, closing any open long trades if the action develops that way. Here the rating 5 was chosen, but for more sensitivity, 9 could as well be chosen by its rating.
AUDUSD M30 Trade analysis:
- At the time of entry background was strong – it is wrong to be bearish in this place. Only weak background is a sign that imbalance between supply and demand is in favor of supply.
- Strong signal before trend changed. In addition, there is no weak signal. This is also wrong for a short trade.
- Entry was made when dynamic trend turned from green to red – ok.
- The trade was not closed after strong signal appeared in the chart. You should close the trade immediately in this place. Reversal signal is supporting exit in this level.
NZDUSD is moving in a trading range. The area between the upper and lower trend lines is known as the trading range. In VSA terms, the (sideways) market is trading within its range, and will continue to do so until applied (selling or buying) effort makes it break out.
A trader who uses VSA principles will analyse price action in the top and bottom quarters of the trading range, because important observations take place in these areas, as the price heads for the supply or support lines.
The area above the supply (higher) trend line is known as overbought and the area below the support (lower) trend line is referred to as oversold.
One more important line in this chart – long-term resistance. Price already several times reversed near this line. Therefore, it is important to observe price behavior near this area.
- Background was strong.
- Strong signals (2 Minor Demand signals) before trend changed. Reversal signal also confirms market turn in this place.
- Dynamic trend turned from red to green.
- Entry in a low volume down-bar. Stop-loss below previous low.
- Exit by reaching TP level.
Total: + 37 Pips
EURJPY M30 Trade analysis:
- At the time of entry background was still weak – it is wrong to go long in this place, because only strong background is a sign that imbalance between supply and demand is in favor of demand.
- There were several strong signals before trend changed – it is o’k. Reversal signal is also confirming market turn.
- Dynamic trend turned from red to green – ok.
- Entry was made in a low volume down-bar – it is a good point to enter the market, because low volume in a bear move shows that there is no selling pressure. It means that professionals are not interested in lower prices right now. Only one thing – price has moved too far after the trend changed and there is a big risk that market will turn soon.
- This is a mistake that the trade was not closed after weak signals appeared in the chart. You should close the trade immediately after 2 Minor Supply or 1 Supply, Major Supply signals. Reversal signal is also supporting exit in this place.
One more trade in USDJPY opened after previous analysis. As I discribed, the market is moving sideways and 123.74 – is a key level which represents resistance to higher prices. Again price changed direction near this resistance. I waited another signals and shorted the market.
- Background turned to weak.
- Weak signal (Minor Supply) before trend changed. Reversal indicator also confirms market reversal in this place.
- Entry after dynamic trend turned from red to green (stop-loss is placed above long-term resistance)
- Exit by reaching TP level
Total: + 49 Pips
