Intraday levels providing a road map

Looking at the below chart, what do you see? HINT: look at the blue and green lines.

Those are the 100 and 200 bar MAs on the 5 minute chart, and what I see is:

  • Traders lining up against the 100 bar MA twice in yesterday's trade (blue circles 1 and 2),
  • Then I see a BREAK below the 100 bar MA today. This is bearish but the road map says "now get to the 200 bar MA (green line in the chart above) and see if you can get below it",
  • Then I see traders lining up against the 200 bar MA, not just once but twice (green circles) and a BREAK back above the 100 bar MA
  • Then I see traders lining up against the prior high at 1.1294 (red circles - Double top),
  • Finally, I see traders lining up against the 100 bar MA (blue circle 3) and that is where we are at on our trading road map

At each of the colored circles, traders leaned against those levels and defined and limited their risk.

We trade between support at the 100 bar moving average and resistance against the double top.

The range for the day is 66 pips. It is Friday. We have a (as Mike would say) a wobbly stock market and no US economic data. Although the European equity markets are under similar pressure to the US equities, the trade seems to be get out of all. The trade for the first part of the year was for international traders (i.e. dollar based traders), outside of Europe to buy European stocks and hedge currency exposures by selling the EUR. Now that trade is being reversed (?). That is my best guess at least for the dynamics of the flows. Having the Dax move down >15% from the high is not all that great for EU economic confidence.

The road says look for the next breaks.

Trade what you see....

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Speaking of trading what you see, I will be conducting a FREE webinar on this subject next week on Thursday, August 27th. To sign up, click on the following link

https://education.forexlive.com/webinar-signup