Supply hit the market Update Australian dollar

AS I mentioned yesterday that we have got another trade location in Australian dollar around 0.9405 Area and that was strong "Violation of rotation center" After "Accumulation", Entry was offered around 0.9410 and I was looking to take my profit around 0.9440-50 area, And After the release of "Australian Employment Report", which was mixed with Unemployment rate rise after decent People were Employed and Market was all set to test the Supply and that area was good enough for us to book the profit as price come back to opening levels of the day.

Updated chart of Australian Dollar

According to my Analysis I always look to find pairs which are trending and have logic to reach or test certain supply demand zone as Price already priced up to behave in such manner.

That is the reason I never look for reversals too early Untill there is clear evidence that trend is mature and look to reverse or correct the earlier trend.

But Australian dollar has spend so much time near the highs, this and got rejected at the trend extremes It will probably correct deeper or reverse, So Now I have maintain my neutral Bias on the pair untill Price take the Highs with conviction and convince me to enter again.

Reason and Logic of trading supply and demand

As I have always mentioned in my previous posts that When you trade Forex currencies then there is strong conviction should be seen in your trades and Most important one in "technical analysis" is trade with logic. "Supply and demand" works together in forex market as there is strong demand coming out on previous reference points and specially when that area is protected.

Few days back I mention that I am long Australian dollar and I have few reasons for that Please check my previous post of Australian dollar here

Check the updated chart of Australian Dollar

Price has reacted the same way as I have mentioned in my earlier post,as that Particular area was strong "Confluence" and price holds the higher prices after breakout as well .

When you have such scenarios, then price usually Gravitates to test the high or the supply areas(In strong or elongated trends), as It has done in that case. Strong selling followed by "accumulation", always tells us the reason why the price has paused and start going sideways and that should be good enough to give us second thought before we go short in such cases.

Specially If there is a breakout and traders often trapped by strong selling and start selling the rallies but logical trading tells you to wait and see before fading such breakouts And If demand level is already protected, then we should trade rotation center violations of false breakout after the daily range breakout to the opposite side.(Also Known as Responsive Breaks)

It is important that you know you strengths and weakness.

Have you thought about this thing – do you consciously understand what is your best niche in trading?

We are all different people. We process information in different ways. The only way to sustain ongoing learning process is to find trading niche that suits your personality.

They say – talent is the key for success. I would say – the key to success is «talent + environment».

To become master trader, you need to process huge amount of information, master all nuances and details of price action before you obtain intuitive skills. This is hard work, but it absolutely doesn’t feel like work if you’re doing something interesting and emotionally rewarding. This occurs when your natural abilities to process information are involved. Our learning curve accelerates significantly if we are operating inside our niche.

I will share with you small check-list that will help you better understand what your trading niche is.

Consider answering simple questions

Do I make tend to make decisions by analyzing data or by «gut feel»?

It’s not even about decision making process in trading, it’s about life in whole. For example, how you decide – what car or computer to purchase? Do you patiently explore feedback from some special internet resources? Or you just follow your impulse and pick what you «feel» is good?

It’s nothing wrong about that. This is how we process information and each of us has dominating style of perception as well as reaction to outside information.

In trading, «gut feelers» will be better at pattern recognition. Price action trading is not a science - from time to time, market creates short-term imbalances and elusive opportunities that can’t be recognized by traditional technical analysis – there’s no way to measure «aggressiveness» of the market or «lack of conviction». Yet people with strong gut feel and intuition can read price action quite effectively. Their learning curve accelerates when they start master some patterns and setups observing nuances and details of limited number of setups.

You can hear from this type of trader: «Here market is strong, here market is weak» - that’s how they view things, they will not be able to explain it. «It’s just obvious» - you will hear from them, after you will ask them to explain their best trades.

Other traders will need research and solid rationale beyond their trading decisions. They will be more capable to deal with building trading systems, measuring and optimizing parameters, dealing with statistics and so on.

For example, I tend to be more «gut feeler» (though I have solid trading approach, once (several years ago) I was trying to master some «mechanical trading systems» under supervision of experienced trader. It was a complete disaster, I’ve done a lot of mistakes, was emotionally sucked out and lost significant amount of money.

It was tough lesson for me – I had to switch back to my preferred trading style and master it. Then, things have become fine.

Are candlestick alone reliable for pullback entries ?

Trader relaize Length of Candles were not big enough

Why I always think that candlesticks are the least important things in considering pattern outlook. I have heard from lot of newbies and experienced traders that candlesticks "Price action" is the best way to trade, But for me it has the least important factor in determining the trend outlook.

When traders saw strong Momentum against the trend,Then traders quickly start observing that it is the end of the trend and Price is reversing, But smart money never react that way, they rely on liquidation to reverse the trend, or to continue as they always try to accumulate their orders and always look to buy low again and stat building on their position slowly.

Same thing has happened in bearish reversals as they always give you better low price to enter and Traders realize that we are getting another chance to buy the Inventory at low prices, And bang they sell with even more forces and that is what has happened in the chart mentioned above.

Australian dollar another demand level could be eyed

I have taken a closer look on the cross last weekend, and waiting for demand level in Australian Dollar which could be eyed by Strong buyers, But the reason I am not too much eager about the setup is that due to strong selling pressure from multi month high.

But as I have mentioned I always look for setups that give clear indication of continuation and In this pair there is one on the cards offering pullback.

In the chart, I have seen some strong reference points which holds the highs and higher highs were posted and strong liquidation which has not yet picked up momentum,but it could be a part of extended accumulation. Strong points are :-

1. Price has strong protection area mentioned by blue line

2. Price close the week on lows at demand area

3. Price holding the demand level after strong selling which could be a part of strong accumulation.

Take a look at the chart below

All the traders who trade technicals and contribute a lot and achieved a lot and have confidence that setup has strong logic and reason to enter and exit. And same thing has happened here for me, as there is no strong supply but a little one around 0.9440-50 area which was previous top and stops could be place around 0.9330 in case any whispaw that will protect the entry .