Hey mate
Hope you had a good week trading, thought Iād send you an example of what I meant when aligning trend lines with rally base drop set ups (see below) if you zoomed in on a smaller timeframe you can see the base at each level.
Also an example of a small 2:1 trade I took last night.
Thanks for the levels email, speak to you soon
Cheers,
Response:
Currently, I’m leaning towards EUR/USD falling to the 1.10000 level…
This dip, in turn, should push the price of USD/JPY up, potentially to the 107.000 level, where it seems the banks have previously placed sell trades. I think EUR/USD will then start to climb once it hits the 1.10000 level, causing USD/JPY to fall… signaling the next phase of the current downtrend.
That said, I anticipate this up movement of EUR/USD will stop once it returns to the sell zone you can see I’ve marked on the daily chart. (Check my daily S + D levels for reference)
At this point, the market will likely fall again…
The EUR/USD downtrend will resume, and the USD/JPY downtrend will end.
That’s my long-term outlook anyhow.
Thanks for the image showing how you align trend-lines with rally base drops. It appears you’ve found a new way to find confluence between the zones and the trend lines.
The trade you executed was impressive for a few reasons…
Firstly, the high where the supply zone formed was relatively close to the other highs of the consolidation you can observe on the daily chart. The subsequent drop could have been an indication the banks have placed more sell trades in the market, in line with where their other sell trades have been placed.
These are the swing highs you can see at the top of the consolidation.
Secondly, if the banks created the drop by placing sell trades, they might not have filled all their sell trades at the desired price due to a lack of buy orders in the market at that time. This implies that, prior to any reversal, the banks might inflate the price to tempt traders to place more buy trades.
Thirdly, the high of the drop (where the supply zone is located) is likely where the banks have placed their sell trades.
As such, any rise created by the banks to place more sell trades into the market is likely to end around the supply zone.
As you saw, the market did return to the supply zone and then dropped out, which confirms our analysis… Now, I suspect a move down to the consolidation lows is likely over the coming week.
Have a great week.
PAN.