Question:
Hi Liam,
Was trading a bit on your directions EURUSD, BRN 1,1000.
Took position and saw Banksters action to keep price below 1.1023
See 1m chart attached.
Is this typically how they operate when they do not wat price to exceed e certain level?
If this is the case and on can detect these levels…. This would make the levels easier to trade…
Any comments from your side?
My Response:
About your question…
Here’s the deal:
I’m not super familar with how Eur/Usd moves on the 1 minute timeframe (5 min is as deep as I’ll go). But for smart money activity, you’re looking for a steep rally or decline into a psychological level: prices ending in 00 or 000. The reversals from the levels are usually dramatic, with 000 prices especially holding signifcant power – clusters of buy and sell orders accumulate around these prices on every timeframe and even other markets (see stocks, crypto).
Oanda’s Order Book (newly updated BTW): Check out the stacks of buy & orders built-up around 0 and 00 prices.
Pro Tip: You can use these bars to gauge when price might reverse from a level. By marking the levels in different colours using bar size, you can build a helpful roadmap for where major turning points and reactions might occur during the day (especially during peak market hours).
Check this out… Oanda’s Open Position tool also shows numerous traders find themselves trapped in losing positions around psychological levels.
The Power Of Round Numbers: Here’s many of the psychological levels just seen on Oanda’s Order Book graph.
Despite price breaking these levels earlier, substantial buy and sell orders are already clustered around the prices ending in “00” and “000.”
Consolidations can also happen undneath the level but they usually develop from large price swings.
Oanda’s Open Positio
Key Takeway: Mark any nearby psychological levels on your charts.
When the market reaches a liquidity point (psyche levels), SM swing use the orders accumulated around the levels to execute their own buy and sell positions orders. The surge of supply or demand creates a steep rally or decline—indicating a substantial order from the smart money. It doesn’t guarantee a reversal, but it ups the odds compared to reversals from 1-minute consolidations.
It’s a heads-up banks, hedge funds etc,. have thrown a large buy or sell order into the ring.
Let’s break it down…
To trigger a reversal, incoming orders must be swallowed up by a larger volume of opposing orders. So, if a flood of buy orders push price up, even more sell orders (bigger in size, not number) must come in to tip the scales and reverse the market.
The larger the order, the more dramatic the reversal because more orders get consumed.
Here’s how it works:
Say 10,000 buys pouring in and the banks sell 20,000.
The 10,000 buys get matched and price drops until it’s paired with another 10,000… The process halts once the remaining 10,000 have been matched.
Hence, a sharp rise or fall indicates the banks have placed a hefty order, suggesting they’re guarding the level and resisting further price increases.
Further declines underscore this, as it implies the banks are either placing more trades or bagging more profits. Both scenarios should lead to a reversal—a retracement for profit-taking, and a more significant downswing for a reversal.
Remember, it’s not an exact science.
Multiple sharp rises and dips don’t always indicate a reversal.
But it’s a solid strategy to gauge if the banks are playing defense.
Hope that helps.
PAN.