Based on recent analysis of USDCHF, I waited strong signals near the trendline. I didn’t have to wait too long.
- Background is strong. The price crossed down the trendline and was in oversold zone. This is a good point to look for strong signals in order to enter the market.
- In this point appeared strong signals – Major Demand in M15 and Demand in M30 timeframes. This is a wide spread bar on high volume (shake-out). The bar closes on the high. It means that there was more buying than selling and now we can expect the price to move up.
- Dynamic Trend changed from a downtrend (red) to an uptrend (green). Now we should look for entry bars.
- Long in a down bar after the trend changed.
- Close after weak signals (Minor Demand and No-Demand in H1).
Like I wrote in the last post on the Yen, the trendline break was something to watch for a potential short, given the major supply signals behind (distribution). Watching the H4 timeframe for entry timing, short after there was a trendline break with good volume (red bar). There was demand at this area but this comes mostly from the prices hitting stop-losses of retail traders, which is something that also happens in most, if not all, supports break-outs.
Closed half order near the support, though could have closed it entirely due to the massive shake-out that took placed, market by a green (major demand) dot. Closed the rest of the trade on the 2nd strong signal, that together with the earlier shake-out, means there is now professional support of the market and the trend may come to an halt.
