Forex Traders Daily
Trapped Traders Daily Analysis
Traps in Trends
January 9, 2018
Hello traders, Mark Chapman here, and we’re going to take a look at the AUDCHF on a daily chart.
One of the guys posted a comment yesterday. Joseph. Hi Joseph, and thanks very much for your comment asking me to take a look at the AUDCHF. He said he was long and yeah, good trade, Joseph and anyone else who took this trade. Really nice that was manipulated.
And what tends to happen when you get a bit of a manipulation when the market is heading up like that in a trend. You’ve got this well-defined level. It’s not the most trending price action overall if we look left, but at the moment it’s heading higher. So, you’ve got this well-defined level. Been traded loads of times. Market puts in a new high. Pulls back. You’ve got this area where people will try and get long, believing that the market will follow through. But you do get the reaction off the level, but what happens is – let’s go and have a little closer look.
So, there. You get your reaction, so people would go long, buying off the level, hoping it will follow through. And then, from there, they’ll place their stops below these structures in here somewhere. And then oh dear, starts going against them. Maybe you do get another bounce a little bit deeper. Again, this gives people an opportunity to go long again. If they missed the original move, maybe this is something that would’ve looked convincing in real time.
Bear in mind, this spinning top is an indecision candle, but not in real time. That wasn’t a spinning top in real time. That was quite a strong-looking candle. If you consider how that wick would’ve looked, it wouldn’t have been there. It would’ve been the full body and heading higher at the level. So, that would’ve been convincing and all that’s serving to do is basically increase the amount of stops that are currently residing there from that previous pop up. Just has to go against them. May get some in there. Be a bit of a brave soul going long in there, but basically what’s happening now is they’re getting stopped out.
So, as it’s breaks down through the level, there’s a forced liquidation event. There’s those traders who went long and are now getting stopped out. Breakout traders would be eyeing this short up, so the forced liquidation event is from these traders going long and being stopped out or manually exiting these trades. You could maybe argue it there as well. But now as it breaks down through the level, willing sellers are coming in. And if something big is doing some buying, their stops that reside under this level, those buyers are stop loss orders. It’s always the opposite.
So, those stop loss orders are being triggered. Those are sell orders. That’s allowing something to start buying. The breakout traders are coming in willingly. And you don’t know how far this will go, but then you would naturally assume a break pullback and you would look then if you’re a retracement trader to get in and take a short. Just look at that as entry cheese. It’s a slam dunk sell. Beautiful.
So, you go short again. More willing selling allowing something big to start some buying. Continue the buying process rather. And everyone thinks they have this level soused. See a sell off again. And boom, there’s your manipulation over and done with. You have some type of pullback and get long.
So, he’s in this trade. It’s a good one. It’s a good example. It’s a good learning trade, this one. What you’ll tend to see is if you do have this area in a trend where you’ve had this accumulation, you often times will see a break of the level and off to higher or lower prices. So, don’t be surprised if you see that. You might want to take some profit on the other side of the level. I’m not 100 percent sure where you took the trade. And have a look at it and then maybe reenter, because if it does get above there, usually, as I say, with that particular type of pattern you’re focusing on the fact you’ve had a manipulation there. There’s a good chance that level will continue.
So, I hope you found that helpful, guys. If you want to join me in my inner circle, click on the link below. Take care.
Forex Traders Daily