As the Sterling is selling-off for weeks in a row, it makes sense to look for intraday opportunities in GBP pairs. Likewise, gold is also getting stronger, as the Dollar weakens, and AUD is directly affected by these movements, as Australia is a major gold exporter.
Since 6th January, GBPAUD H1 has been forming a round top, which is a typical distribution pattern. Most importantly, VSA confirms it, as the there have been major supply signals in H1 and above timeframes, and sluggish movement. The background has also been weak, and an opportunity arose when there was a minor supply signal in H1, to which there was an alert given.
GBPAUD H1
- Weak background
- Supply signal
- Entry on the break of the supply bar (could also be on the previous)
- Exit on take-profit. If not having exit, with the low volume bars, it would be wise to atleast close the order partially and get in at a better price.
The prices are now approaching a previous support at 2.017, and are on the lower part of the trading channel. There could be opportunities to counter-trend trade, if prices can stabilize above the recent low at 2.02457 and demand comes in.
GBPAUD H1 Trend Channel
If we look at big picture in USDSEK, we see that Swedish krona has been moving in Mark-up phase since March 2014. It was a very persistent bull market without any reaction to the uptrend. As the price was reaching resistance level of previous high, the nature of movement was changed and mark-up phase was replaced by distribution phase. Price formed a resistance at 8.8000 level. It is well known that people think in round numbers and place limit orders, stop losses in this point. Here is some tip: Avoid round numbers when placing your stops – market-makers will know where your stops are. Above and below any actively traded market are not hundreds, but thousands of stops. The professional traders will gun for these stops, especially during periods of thin trading activity, as this represents an excellent moneymaking tactic.
In daily chart it is well seen that the price is moving sideways limited by levels of support and resistance. The rally was stopped when supply has entered the market (several weak signals on the chart). Nature of bullish trend was changed in this point and price started to move in a trading range. Watch carefully when the price is coming close to the support or resistance. Weak or strong signals in Analytical Trader will help you to understand whether the price will break these levels or not.
This is a follow-up trade of previous EURUSD analysis. Price with high volume bars has broken lower line of ascending triangle (this is a good sign of genuine break-out). Later we had a weak signal (supply) near this line and price continued to fall.
- At the time of entry background was weak
- Weak signal (Supply) before trend changed
- Dynamic trend turned from green to red
- Entry in a low spread bar while the price didn’t move too far.
- Exit immediately after strong signal (Demand).
Total: + 160 Pips
As I noticed earlier, EURUSD was moving in an ascending triangle. You see how price several times noticed the long-term resistance. Every time Analytical Trader detected disbalance between supply and demand when the price approached the resistance level (by showing weak signals: Minor Supply, Supply, Major Supply). Once there was up-thrust – a sharp up-move beyond upper limit with wide spread bar on high volume closing on the lows (Analytical Trader detected Major Supply – very weak signal). Weak holders opened long trades during this move, hoping that this was a genuine break-out. Very soon their stop-losses were triggered.
Let’s get a closer look at this chart.
Last time when the price approached the long-term resistance we had 2 weak signals (Supply and Minor Supply). This has led to a price reversal. Right before the lower line of triangle was broken we saw several high volume and wide spread down-bars. The break-out bar was also on high volume. Therefore Analytical Trader can help us to predict whether the price is going to cross support/resistance levels or change direction. We just have to follow its instructions and it will significantly increase our chances to profit in the market.
- At the time of entry the background turned to strong. It means that imbalance of supply and demand is now in favor of demand.
- Very strong signal (Major Demand) before the trend changed its direction.
- Dynamic trend turned from red to green.
- Entry – when the background turned to strong and the price didn’t move too far from the dynamic trend.
- Exit after weak signal (Supply) appeared in the chart.
Total: +145 Pips
In the chart we see that mid-term resistance (previous high) was crossed by wide spread up-bar on high volume.
Resistance – this is a level of previous high, many traders bought near the highs and were locked-in when the price suddenly fell. They are now holding out in the hope of reducing their losses. Locked-in traders want only one thing – to get out of the market at a similar price to the one they first started with. Professional traders that are still bullish know this. To encourage these old locked-in traders not to sell, professional traders will mark-up, or gap up the market, through these potential resistance areas as quickly as possible.
In previous EURUSD analysis I noticed how the price is moving in an ascending triangle. The same pattern you can see in the above chart. Now Analytical Trader has detected bullish setup: Background is strong, dynamic trend turned to green. Only one component is missing – strong signal behind.
I want to note how accurately it showed SL (stop-loss), TP (take profit) and BE (break-even) levels.
SL level is below up-trendline – it is a safe place, because it will require effort to cross this trendline and it will not be easy to trigger SL in this level.
BE is right on a long term resistance – you will not get losses in case of false break-out.
TP is on the level of previous support and very high volume. There is a big chance that in this area the price may change its direction.
In H1 timeframe we see how the price crossed long term resistance (area of previous Major Supply) with wide spread up-bar on high volume. It tells us that this break-out is genuine. Before the break-out the price was moving in an ascending triangle – look how lows grow up.
