Extreme support levels In Current Major Currencies

Currently the price action is sideways, may be waiting for Fed to taper more this wednesday, but Our work is not be too much complacent with what would happen will drive the price for surety, as Eur rate cut was welcomed by market and euro found support around 1.3500 area.

But for me I never try to predict what is going to happen or not. I always look around for the pairs which are trending and the reason they go sideways or trend is paused needs confirmation or even if fundamentals does opposite, they do tend to find support to really again .

And that is why I have put a lot of thoughts in to usd/chf chart which has told me that recent rally from the lows could be a hint of big buyers and support zone is strong around 0.8956 and 0.8910 area but I would expect later to protect any strong downside rally, But we need to trade momentum from the located areas on the chart and I would looking to add more to my recent longs around that area again

Take a look at the usdchf update chart . Are we looking at culmination ?

In this chart there is stair stepping trend, which is followed by moving market accumulation and then pair has found support on similar levels it did before, And pending rally still looking for momentum and this could be a start of culmination which means there could be a start of strong trend and we need to keep look to buy on dips, if and When we are offered any such opportunity.

Price action basic recent update when there was no supply

I have covered most part of these blog with "simple price action when there breakouts followed by neutral day minor developments and has no supply to hold the price to that level", which means that if we see some area is protected by the market strong holders then any spike and downside rally is always strongly protected by those areas.

In the following chart I have covered a scenario (the most recent one), where you could tell yourself who is moving the market or who has the control on the price action next move

If you dig deeper than simply following price action, you will understand that supply and demand will drive the market. But supply can be short-term, then transform into demand and vice-e-versa.

So, you have to rely on professional supply and professional demand and be able to distinguish it between other fluctuations.

Recent price action makes it clear where is ongoing demand

Check this post how reference points works to find good trade locations

Charts often tells you what to do and to trade what you see, but when we relying on other things like candlesticks patterns or any other trading techniques we relying on them rather than we really on what chart trying to tell us and that is what basics of price action pure basics are.

When market breakout from a level (Strong accumulation breakouts or range breakouts) and maintain a level above and we strong neutral day and minor development area and then market end the days on lows, then we have to see if there minor protection and development area and look to see the market reaction when price touch that development area again.

In the above chart of nzd/jpy strong trade location were there as there was minor consolidation areas were at the top and market really had no supply below to hold the prices there and the result was followed by strong demand.

Candlesticks patterns are reliable and work most of them as congestion

I see that many traders create complicated approaches to trading, so I've decided to share with you some simple candlestick patterns that you can use in your trading. But I must warn you that patterns itself are not enough to generate consistent profit.

You will easily find conflicting patterns on the same price chart – one signal to the «long» side, one signal to the «short» side. You have to choose between those signals – which would you accept?

So, patterns are not enough. You should sort of «big picture view». You should have idea of where the market is traded right now. I say – «idea», it’s not really «knowledge».

Every view we have is considered to be an idea that we have to test – sometimes our ideas are good, sometimes not, but if we build our ideas basing on something that works, we increase our odds of success.

Also, it’s more effective to use those patterns on time-frames starting from H4 and more. The lower your time-frame, the more noise you will have and the less importance candlestick formations have.

By «candlestick formations» I mean something not too complicated. All those «Morning stars», «3 white soldiers» and other conventional candlestick formations create more complexity and push us to predict price action rather than to trade upon what we see.

Congestion area often give traps or continuation hints

1. Congestion. Most of the time market holds in congestion. It is a price formation, that is built like shown below. We have measuring bar (candlestick), usually it’s a candlestick with elongated body. High and low of measuring bar become local support and resistance level.

Also we have at least 4 candlesticks that don’t violate or at least touch high and low of a measuring bar. Duration of average congestion – about 10 bars/candlesticks.

If we register that market is traded within congestion, all trading signals will be of low importance. Price movements within trading ranges can be a result of random move. Nobody really knows what do they indicate.

Also, price will tend to find local reversal points within borders of congestion.

2. Simple continuation pattern. If you see that price action emerges from congestion or some trading range (and you back up this pattern by understanding that main trend is headed in the same direction), you can use as simple pattern as shown below.

First you identify directional bar/candlestick that is considered to have small or no tail at the upper side (for bullish pattern) or at the lower side (for bearish pattern).

Then you simple can divide this candlestick on 4 parts and place your buy limit order at the upper quarter (for bullish pattern) or at the lower quarter (for bearish pattern). Your stop-loss should be set with respect to volatility (say, ATR indicator) Let me know if this topic is interesting – should we continue talking about that?

Strong signs of Paradigm Shifts

As, I mentioned in the last part of my trade updates about Australian dollar can continue the rally, and It give me confidence after decline in unemployment in OZ area still giving boost to Australian dollar and Longs were triggered around.

Australian dollar can break through any time

The best part of this activity is that liquidation break has been faded out and price has taken the highs out and Now just consolidation and holding higher prices, which is also a good clue if it is followed by a test of trade location during the release yesterday.

If you want to get good price and capture a reversal of correctional trend(as you can see price spike off minor development area from the lows which is mentioned in blue rectangle), you should seen signs of real support. Real support creates conditions for a reversal if market goes against big buyer, as I mentioned when big buyers are holding the prices at highs and create trade locations and then we see strong selling as market goes against them in this case. (remember –to reverse the market, there should be supply/demand imbalance).

Reversal occurs after paradigm shift, when it becomes clear for most short sellers that they were biased and go in the wrong direction.

In such case, we most often see imbalance in price action, when market has already create a development area and end the day on lows, then next day or two we saw strong accumulation and rejection from the prior day low, the suddenly paradigm shift and strong continuation of the trend is seen.

Reference points involvement in predicting next possible move

I have covered "reference points" in my previous post in which I mentioned how we can "pick reference point in predicting the next possible move", as there is always a chance of neutral activities after breakouts, which prevent the strong rallies to the downside.

I posted a chart of usd/chf chart on Friday for possible continuation to test the highs after we have some good trade location taking out the "highs".

The chart below is a true indication of institutional activity and when we have some good reference points after breakouts, then strong downside rallies are often "reversed" as In this case.

Recent price action update of usd/chf chart !

Although it is not necessary that we should look for this kind of price action in every strong breakouts because it tends to gravitate to the upside after the end of correction, But the chart which I mentioned above accumulate after that downside rally and strong breakout test was there and that rally pause to take the stops of buyers.

But the important thing is next rally was powerfully to give you second entry and trade location was exactly the low of correction that start from low of bottom.

I have seen some strong buyer is Australian dollar as well will post the chart soon If I got something substantial