Forex Traders Daily
Trapped Traders Daily Analysis
How Stop Hunts Unfold
December 6, 2017
Hello traders, Mark Chapman here, the creator of the trademarked Trapped Traders Concept.
Welcome to today’s Trapped Traders Trade of the Day Analysis. Today’s date is Wednesday, December 6, 2017.
And I’m just looking at this level on the AUDCAD hourly chart. You’ve got this level where price put in a new high relative to recent price action, so there’s a real strong pivot away from that area. And what that does is that creates a situation where, when price comes back to that level, people will be watching it as a potential area to go long. Support-resistance traders.
So, if we take a bit of a closer look, now none of that means there are stops there automatically, but what it does do is it means that those traders will have eyeballs on it. And if we look at this candle formation, we’ve got a big engulfing candle. Strong close closes above the highs of these previous three hourly candles, so this is the type of price action that will tempt a trader in, believing that that level of support is actually holding.
So, now what happens is you get the stops under the level. So, this can develop into a manipulation or it could hold as a level of support-resistance. We never know, but this is the beginnings of it. So, if you then get a drop down through the level, stopping those traders out, you’re also going to get breakout traders come in. Retraces. Retracement traders come in, and then you can have some type of manipulation. Looks a bit like that, and then you can go long.
The only problem with this is we’ve got the BOC rate decision later today, so want to just keep an eye on, but that’s basically the process by which a manipulation can unfold. Hasn’t happened yet, but this is what it looks like as it starts to develop.
So, I hope you found that little tidbit helpful and I will see you tomorrow. Take care.
Forex Traders Daily