Forex Traders Daily
Trapped Traders Daily Analysis
How to Outsmart the Stop Hunters
December 5, 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 Tuesday, December 5, 2017.
And the chart I’m looking at is a four-hour chart on the AUDUSD. You’ve got this level. Obviously it’s been touched a few times in there. So, support. Breaks. Then becomes resistance. Resistance. Resistance. Resistance. And it’s going up through the level. The problem with this is there’s not that much entry cheese there. If you go down the lower timeframes, there is a bit of selling there, but I’d really like this to sell off now. It would have to do it pretty quickly. Draw those traders in and then some type of pop up through the level from there.
Then we would potentially see some type of retracement. Then break pullback traders maybe getting involved. And then a failure. Something like that. Obviously it can look loads different every time, but the process is the process is the process. I’m just contemplating whether or not there are some residual stops there from this move. If you think this through from the bottom, if you were buying on this double bottom here and you were trading it, to take profit, where would you go to take profit?
Most likely over the other side of this range. This level. So, the traders who bought down here, these buyers, would TP over here. Take profit. Make their dollars. Now then. If you were selling off here, you would target likely the other side of this range. Just inside it. Now, it fell short of it, but I’m not convinced that there’s traders still there. However, if you sold in here, that was kind feeble. So, there is potentially some stops there anyway, but I’m just not massively convinced.
It’s a little bit too far. It’s about halfway across that range. Now, I would prefer it a lot if it was sort of in that sort of upper third quarter area and then was coming up through the level. And if you didn’t get any selling at the level under those circumstances, I’d still be confident you had some stops there. And the rationale for that is that if you were a seller here and you have this well-defined range, let me just draw it out so you can see it a little better.
You’ve got this well-defined range. If you sell here and it kind of only sort of attempts to make it across the range in that sort of quarter third of that entire range, then when it comes back up to the level, even if you don’t get some selling at the level, those stops will probably be there and the reason is obviously – well, not obviously, but the reason is a lot of people will hold and hope that the level holds. And when you’re in a trade, you lose a bit of objectivity. You want to try and give the trade an opportunity to profit. But if doesn’t travel that far, there’s a good chance you’ll still be there.
And that’s why this is just a little bit sketchy. It’s gone a little bit too far. I like the strong move up. That does have an impact because if you have the level and you sell off it, and even if it goes halfway kind of thing, if you get a really strong move, that’s good because that’s going to catch those sellers out. So, there is that going for it, but it’s just gone a fraction too far for me across that range. People have had plenty of time to exit that position before we get to where we are now. And if they do that, obviously when they bounce, as do their stops.
So, it would really have to sell off this now, like pretty sharpish on this four-hour time compression for me to be happy about this. So, it’s just in progress. This is how it goes. This is how I analyze a chart like this. It’s interesting from a learning perspective as well. Plenty of little tidbits in there to help you.
So, if this does sell off, then it needs to do it now. You don’t want it to go above that 0.7660-level, 0.7670-level because obviously any stops that are there will be gone. And then if it just follows through, then I wouldn’t want to get involved in there at that point. So, it needs to sell off. Needs to do it quickly, and then go up and then trap them and stop hunt them, and then down.
Okay, guys, take care.
Forex Traders Daily