How To Read Chart

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Distribution example on the USDJPY market

This is a small-scale distribution on TF 1h.

  1. Buyers receive an increased profit from rising prices. Everyone wants to be buyers. However…

  2. Look at the dynamics of prices and the relationship to volumes. Growth slows, but volume remains high. EVRT. This means the resistance (by professional Limit sell orders).

  3. SB. Supply Bar after a bar of indecision. Selling pressure confirms the weakness at 109.40.

  4. After this elegant SLKB, the market receives a bullish momentum.

  5. However, look at activity on growth after SLKB. This is no demand. The Chart says it is too expensive to buy.

  6. However, inexperienced traders enter the long. Perhaps they use the signals of their lagging indicators.

  7. The trap for buyers slams. The market drops sharply at high volume. This is SB, as well as a bearish change in the character of market behavior.

  8. Wave ND.

  9. Wave S.

  10. Buyers (they were recently in the majority) close at a loss.
Actually, you can play a short raise. In favor of this idea you have minor bullish arguments:

  1. Bounce from the downward channel line
  2. Activation of stop-loss buyers at a level that shows a blue thin horizontal line.
But buying is a high-risk idea as there is a zone of weakness on top. Assess your chances.

Hope this review has been helpful, thanks for reading.

 

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Why the gold market is near support.

Let's draw on the facts from the chart

1) We have 3 balance zones. They are marked on the chart with purple profiles. Profiles look like Gaussian Bell (normal distribution). Each next profile (auction) is lower than the previous one. The balanced price in the first profile is 1490. In the second - 1470. In the third - 1456. The balance zones are stepping down. But look at the rate of decline. The first time we went down $ 20. The second time - by 15. The decline slows down. That is, seller pressure exhales.

2) Look at the volumes that I highlighted with arrows. This is a big advantage in sales. But as we can see, they did not lead to a significant drop in prices. This means - support is near. If the market does not fall after a surge in sales, he has found support.

It seems to me that if this support is at the round level of 1450, then we can see a false breakdown of 1450 and then a quick recovery.

 

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Let’s start from background. We have 12k major resistance. Market rejected down from 12k resistance in summer. And decline reached as low as 10.7k.

After big pump-bar 20/Sept, price gained 12k level again. Will the resistance reject price down one more time? Or will it be broken in upward direction? This is the question. Let’s ask the chart.


Here is the idea from price/volume action:

  1. EVRT. Extremely high volume amid lack of bullish progress. Price penetrated 19k level, but closed down. I’d like to interpret it as the Heavy Selling Zone above 19k. If the volume did represent the buying, closing would be much higher. Next two days have the volume higher than average but a lack of bullish progress. These two days could be described as the “echo” of powerful EVRT on 31/Oct

  2. Here is the attempt of bulls to breakout above 12k level of resistance. But look the volume - it is low. the market is not active around 12k. This could be ND. Next day has also small volume. The price bar has a shape of NS - attempt to go down during the day but closing on highs. If 7/Nov was NS, then next day 8/Nove should be DB. Instead…
3)… it appeared as SB - increase of volume with wide range and increase of volume, closing on low. That is why slow activity on 06-07/Nov is confirmed lack of buyers (No demand). That is why I’ve marked them as ND and ND2.

Well, we have EVRT + ND + SB. This is a sequence of bearish reversal. Chart claims, bulls are incapable to struggle through 12k Resistance now. That is why, the most expectable scenario for in the current obstacles - sliding down toward 11.7k Support-From-Demand-Bar line.

If professionals are really bullish, they need some manipulation in order to produce another attempt. Look on recent action. We have SLKB-Trap manipulation bar. It appeared before DB 29/Oct. It was a powerful pattern to start the new bullish attack.
 

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Update for Gold market
We have detected the strength around 1450.
SLKB under 1450 initiated the up-wave (I marked it with black wave-trend lines)
Let’s update the view using new information from today’s session activity.
  1. On the opening, price penetrated the previous minor high and quickly reversed down on the next bars. Potential SLKT.
  2. Soon we got ND - lack of volume on up-bar represent the lack of buyers pressure and No interest in further higher prices. Market started to decline.
  3. Oh, this is demand entered to support the falling price. Some big interest decided to benefit from buying a cheap contracts. That is why we have narrow range on red bar amid nigh volume (follow blue arrow). What is worth attention - EVRB appeared around duplicated wave-channel line C. So we have to expect the bounce up.
  4. IMO, this up-bar with long-up-tail represents the culmination of bounce-impulse. That is why - price is likely to slide toward C line again.
What is next? Line C is likely to be broke down. The visit of 1450 level will give an important portion of price/volume relationships for considerations.

 

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#AUDJPY

We have 1-2-3 up-ward channel on place (red lines).
This is the borders of up-trend. While the price has been moving within 1-2 top-half of the channel, a lot of buyers did profits and happiness. They were in the extreme majority (blue bold lines on Profit Ratio indi).

But market is not a place to produce profits and happiness for everybody. Thus, look at what did happen next.

Follow blue markers:

  1. Up-bar with spike in volume. Hitting 75.50 level.
  2. The next two down-bars erased all profits from bar 1. So, 1+2 combination created a Trap (preparation for further decline).
  3. Decline. Bullish happiness (profits) turned to tears (losses).
  4. Price hit a parallel trend-line with series of bearish bar. Despite the volumes were not too extreme in size, I believe market experienced Panic emotions. Note the speed of decline increased.
  5. Majority jumped into shorts
The goal of decline seems to be completed

  1. No supply
  2. Demand bar
NS+DB is not very obvious on this chart (because of the volumes data from forex broker). Nevertheless, the shapes of price movements make me believe this market has more bullish intentions than bearish.

Maybe price is going to reach 2-line in the next days.

 

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We have a red zone of balance on the background in the region of 9200. It was a balance that was supported by demand from positive news from China. Resistance was provided by the line of the descending channel and the entire huge zone of weakness, which developed during the summer and was broken down on September 24.

A red circle indicates a destroyed balance. Down-bars on rising volumes marked the beginning of a downtrend that is currently in effect. This down trend is limited by the lines of channel A and B.

After a series of traps, the price reached a round level of 8 thousand. I assume that a breakdown of this level will occur soon. This will cause some panic. Please note that many “stop-loss” buyers are “hidden” under 8k. Therefore, we will see a down bar on a huge volume, and then - a technical rebound up. For example, to resistance line A. Then there will be another attempt of bears to struggle through level 8k. If it turns out to be successful, then the price drops to 7.3k. This will be good news for the bears.

This is my main scenario.

 

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Pot stocks are headliners these days. Let’s read the ACB chart.

After extra-big spike in volume amid rising up-bars in March, price declined more than 75% until the current days.
Study the volume. After breaking down 3.50 support leve (blue line), price started to decline with increasing speed. This brings panic to market. We have the highrst volume on 18/Nov. I always suggest extremely-high volume on down bars as the potential selling Culmination movement (Hidden strength).
Note:
  • 18/Nov down bar hits the bottom line of the down wave channel
  • next two bars are green.
So, what is next?
Probably, we are entering the accumulation stage. It will take too much time to absorb the supply at the lower prices before switching to up-trend mode. New lows can arrive, but I do not expect wide breakdowns. Bearish progress should stall, and horizontal range between 2.0 and 3.0 is going to develop IMO
 

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GBPUSD overview
We have a two-tops pattern on background.
  1. This is FOMO buying culmination
  2. Selling pressure.
Note Ratio indicator - it shows the profitable buyers were the majority (3). But the market is not designed to make profits for people. That is why we got decline (4) and tears for buyers.
Decline finished when the bearish profits became the majority (5). Then market reversed up again to make tears for sellers. As you can guess, the upward movement finished when profitable buyers become the majority (6) again.

At that moment we got:
7) Fake penetration of high (1) - SLKT
8) Minor high

And today the chart plotted new two-tops pattern but on a bigger scale in comparison with (1-2) pattern
9) Here is the level of Stop-Losses
10) Here is SL-Killing bar
Note the bulls were in majority. So, you should expect what?
  1. Right! Tears for buyers.
I have bearish expectations until sellers’ profits became the majority (bold orange line on the highs)
 

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Rushi asked me to analyze 4h CADJPY. I switched to 1D because:

  • It did take much time to begin answering
  • 1D TF is telling more clear and important story.

I noted the key signs on chart. As you can read from chart, we have:

  • zone of strength formed in August around 79.5
  • signs of weakness above 82.5

Currently, bulls are trying to push price higher with EVRB 20/Nov at the level of SFDB 81.50. This is a reasonable setup, but as for me, we have too much fresh weakness overhead. Price is moving in the middle between 2 orange lines. Here is market vulnerable to print counter-minding messages. Yes, we have bullish arguments on this chart. However, I do not believe they will lead to strong rally.

yleZbUh[1].png
 

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In the previous post about #BTC I mentioned that:

the most recent Trap was made for Bears, not for Bulls

After that publication, I got a questions about difference between the traps for Bulls and bears. Let me clarify my thought.

Trap for Bulls:

  • Buyers watching for entering Longs,
  • Price forms small up-move,
  • indicators give buying signal
  • Buyers enter longs
  • Price quickly reverses down and makes bulls cry while their losses become growing.
On the cluster chart you can find Green Clusters as Positive delta indicates execution of Buy-Market-Price orders

During formation of Trap for Bulls, also triggering of Stop-Losses takes place (SLKT). They also produce green clusters as Buy-Stop orders execution also increase a positive Delta.

Example of Trap for bulls (and SLKT) you can find in point 1.

The opposite is valid for Trap for Bears

  • Sellers watching for entering Shorts,
  • Price forms small down-move,
  • indicators give Sell signal
  • Sellers jump into Short positions
  • Price quickly reverses Up and makes Sellers cry while their losses become growing.
On the cluster chart, you can find Red Clusters as Negative delta indicates execution of Sell-Market-Price orders (new short positions)

During formation of Trap for Bears, also triggering of Stop-Losses of Buyers takes place (SLKB). They also produce Red clusters as Sell-Stop orders execution also increases a Negative Delta.

Example of Trap for Bears (and SLKB) you can find in points 2.

Note point 3. This is a potential SLKB under 7100. Watch for Demand-Bar on faster TF in order to join the Bullish Team in short-term perspective.

 
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