AUDUSD has shown several weak signals approaching the down trendline, which was a confirmation that the downtrend was to continue. After some strength on the end of the US Session at 15/July (blue dot), the market reversed and it rallied to the trendline once again. Upon reaching near it, the market tested for demand in the market, by marking up the prices and waiting for activity to show up. The volume was relatively low, below the average, and the prices failed to rally, which means the No-Demand test marked by the pink bar, failed, and there was lack of demand in the market.
Shortly after there was an alert on a trendline nearby, and the price hit the first target already, which guarantees we’re not losing anything in this trade. Before the downtrend continued, there was a 2nd similar alert. For a future short entry prices must come up near the trendline again, to guarantee a good Risk:Reward. Also look out for strong signals in this price area, because of the 15/July strength, which could turn the trend.
In this trade there were 2 major mistakes:
1. There were demand signals before at this price level, so any short should be avoided, unless the price had made a very significant rally.
2. There was no weak signal before the trend change. This is necessary to guarantee there is some smart money support for the down move
1. Background was weak
2. Wait for an up bar near the broken support. Entering on the break-out bar, about 2 hours before, is also valid, as long as it has a volume above average.
3. Set the take-profit on the red-line of the StopLoss indicator for the S/R Breakout setup. If there were strong signals (Major Demand/Demand signals) before they would be the exit point instead.
After the Greek voted ‘No’ on accepting the Troika’s bailout proposal, Euro gapped down at the opening, in seeming weakness. But lower prices meant it’s now a currency more attractive for buying, which is what institutional traders did – we can see 2 major demand bars, still in the Asian session, and afterwards test bars (Oanda’s feed). EURUSD also failed to break the previous support at 1.095. I’d like to see either a trendline break or the prices testing the demand zone, to get in long at a better price and to ensure the trend is really about to change. The daily trend is still clearly down, and this move is happening after major supply at 1.134 in the beginning of June, which could dominate over these smaller trends if there’s not enough strength for a pullback to happen.
GBP/AUD was near a support after the low at 18th June (red line below prices). Everything fit into place in this trade for the Support/Resistance trading setup.
1. Background was neutral
2. Demand signals near the support, which is the smart money buying into a previous area of demand
3. Went long in a test-like bar (part of long type bars), shown by the volumes indicator
4. Exit in a weak signal. Holding through the weekend and exiting on the trailing stop was also OK
In Euro/US Dollar we’ve seen massive buying recently, which subsequently made the downtrend reverse. This can be seen by the very high volumes and green signals, highlighted in the drawn box. Tecnically, the prices are just below a down trendline, and an interesting bar was seen in the weekly timeframe, signaled by the arrow and an orange histogram – this was an upthrust, a bar that closed on the lows of the week, yet making a high significantly far away from it. The high is at 1.138 and the close at 1.110, and it’s accompanied by a very high volume. If the prices traveled such a distance on such a volume, this means that was actually selling coming into the market that week. The question is whether this is just a temporary weakness, and we can look at the daily for more clues…
In the daily timeframe, there were many strong signals since March’s bottom, and prices are making higher lows ever since, which means until now the market has been sustained, but reaching at the trendline, the volumes are quite low. Two possible scenarios are: the trendline being broken with moderate/high volumes, which would be a good demand confirmation for a long OR the market makes a lower high or lower low, which would break the uptrend going on in the daily and would mean the weakness seen in the weekly timeframe is ‘spilling over’ and preventing further advances.
