This publish marks the beginning of a brand new weekly class right here on the Tradeciety.com web site. From this week on, I will likely be sharing the chart of the week each Friday right here on our weblog. With the chart of the week, we’re going to take a deep dive into chart analyses, and value motion buying and selling, utilizing a step-by-step method to understanding value charts.
This week, we’re going to try the AUD/USD. I shared this chart research in my weekly e-newsletter beforehand. If you wish to be a part of my weekly buying and selling e-newsletter and obtain one e-mail each Thursday with model new buying and selling ideas and the perfect chart research, you’ll be able to subscribe without spending a dime right here: Tradeciety Publication
Let´s begin on the larger timeframe and we are able to discover quite a lot of nice insights concerning the value motion right here:
- The Double Prime marks the excessive level of the vary. When the worth fails to clear a excessive, the sentiment turns barely bearish. However there may be extra…
- Subsequent is the Liquidity Seize. A Liquidity Seize is a fakeout sample. This sample reveals the rejection of the bullish try and take out the highs. One other bearish sign.
- Then there may be the Break of Construction which alerts that the worth is now in a position to break into recent lows. At this level, it’s time to go to the decrease timeframe.
On the decrease timeframe, we are able to see the breakout pattern wave. Nevertheless, one factor is necessary to look at right here: Though there’s a breakout, the pre-breakout pattern wave is extraordinarily bearish. The merchants who resolve to only promote the breakout at this level are chasing the worth. That is usually thought-about unhealthy apply. The longer a pre-breakout pattern wave is happening, the upper the prospect of a pullback. So the perfect factor right here is to attend for the subsequent sign…
Ready was actually the correct resolution. Though, on this instance, the breakout may have offered a small winner, this isn’t at all times the case and a pullback also can happen a lot sooner. Now, the worth has arrived again on the breakout stage and we are able to await assist to show into resistance. To get a good higher entry sign probably, we are able to go to a good decrease timeframe to look at the worth motion there.
The decrease timeframe reveals this wonderful Momentum Buildup sample. The worth has constructed a pure assist stage and is de facto sticking to the extent. This reveals that there’s a lot of promoting curiosity that’s protecting the worth that near the extent; the patrons can’t get the worth larger from there anymore. A breakout may sign the beginning of the subsequent pattern wave. That manner, the dealer wouldn’t chase the worth however enter comparatively early within the new pattern wave; a significantly better entry situation in comparison with the primary one above.
And voila. The ultimate final result. In fact, this is not going to work out on a regular basis however nothing in buying and selling works 100%. Nevertheless, this top-down method could be a nice basis for a buying and selling technique. I might suggest attempting it on Demo or in a Backtest (no actual cash!) and evaluating the effectiveness for your self.
That´s it for this week´s chart of the week. You’ll learn once more from me subsequent week with some new buying and selling ideas and my favourite charts.