I've pulled of some education portion to tell you what is flag and flag limits & how to trade those flags with low risk high reward opportunities. Flag Engulf flag in Usd/cad and we see a swapping buy orders which are being tested and it is followed by demand level & that area is good enough for buying with target above PRZ
Canadian dollar buying opportunity targeting 1.3286 area
I would preferred to stay long amid demand levels & then I will see reaction when it approached next decision area which is 1.3286 area.
Wait for follow up chart in next few sessions
UPdated 21st NOvember 2019
Profit taking on usd/cad buy
It was a no risk entry as I mentioned in the chart above. from 1.3196 to 1.3306
Chart follow up as I promised there would be a follow up of the entry. Price rising from a breakout zone. As I stated last time, that price is usually go from one decision point to another. We saw strong movement follow by pause in rally even though immediate short execution at rise of pole flag, is very risky but it was the decision to fall or you can source of the downmove.
Readers who have spent time on blog understand the fact that what I'm pointing out the recent bull rally & decision point to another decision point. There is a big difference in trading ranging breakouts and trading strong breakouts follow by retests of the zone. Zones that retrace & continue are usually flags engulfed by flags know as swapping zone & price usually test them with low liquidity. That is all that has happened with the 1.3189 which was Fl of the flag that breakout from a flag continously made higher highs higher lows.
We are approaching year end & there are still quite a few setups that I've in mind and spot on charts and one of the Eur/usd. Eur/usd every rise got hit by bears & this time around it has been the same again. I would like to see a breakout of 1.0979 level to see if there is enough pressure on bears to make a new yearly low below the recent one. I do expect to see a strong bear really ahead of FOMC meet in december & then we will see a possible low of 1.0810 area . So, the entry would be very low risk one or may be around 1.0965 with stops just above 1.0995 & target would be straight 1.0850-30 area.
But I would update you guys before there is any hurdle and bears start putting pressure on Euro pairs & that would remain the price action for next two to 4 weeks. I don't see euro go past beyond 1.1120 area & 1.1090 & 1.1115 are very large hurdles for euro to cross.
Role of support & Resistance in overall Context of Price Action
Price Action really need some help from liquidation provided by Retail traders. One thing we must know that without retail traders there are no trading activity or orders that can push price Up or Down.
That is how banks and institutions manipulate or trade forex is to take the help of every support and resistance that they can. Banks use those support and resistance areas to put orders above or below the IF there is enough orders that are waiting to be taken out and finally push that is required to test the previous flag or demand or supply area.
If you look at the chart above, then there are few things that you must notice which is type of orders after a strong push to the upside. Price reacted to the zone with a failed breakout & then price action follow through and found support at the previous demand level & that area was providing consistent liquidation or orders to the providers.
One thing that we must understand that Price Action unfold & sentiment changes after every hour. We cannot set buy sell orders based on support and resistance as sentiment changes after the breakout to the upside.
Decisions points is the crucial thing you need to understand before buying and selling
Trading has nothing to do with just buying and selling . No one can understand the type of orders untill you dig deep and find reason why there should be a need of buying or sell an asset. Assets requires supply and demand to initiate orders. Orders need to be in bulk and target should not have hit. There should be clear set of orders below and above to hit the target. One must need to understand the what is the proper stop and entry to take a touch trade or even setting stops below or above the price Action zone.
Classic example of set of orders in Trading of Pound Dollar
Chart above explains the reason how sentiment does changes after the upside push through but it was not good enough for the banks to look for liquidity to push the price down & they start manipulating by strong push from the downside & rejection and then price finally fakeout market with red arrow & then took the help of support again but it was all done with the pending orders as there were orders when price makes a breakout from the triangle breakout from the downside.
Chart below represents the bitcoin which is about to test the low level of a flag. When We look that chart closely then you would found out the left shoulder past the levels which is historic pattern and price has already ignored that level. While watching or buying at low levels of a flag breakout specially when we have left shoulder in support of the recent price Action, there there is surely a recommended level specially when we have FTR above the recent PAZ.
As we all know that BTC is very high volatile pair & I would recommend buy at top of the flag area market with blue line & watch out for engulf on top of the pattern as flag. I would love to post an update with live example to let you all know how flags engulf flags & these type of breakouts are best to reach its targets specially when retests does not reach its target. So, Wait and watch out for update & don't buy this low as selling pressure is still persists on Bitcoin.
