Return to Supply on EURUSD 5 Minute

Be tricky to have got into the first pullback due to Sunday market open.

000EURUSDM5

As for the second pullback we can see some absorption. If volume starts to build below, and we see a pullback or fresh demand, then it could go. Its not one automatically fade until we have followed the price action.

UPDATE:

It broke that supply (in fact an early supplier had been taken out and we can see the pullback).

00000EURUSDM5

GBPJPY Kicking Myself (Again)!

Wish I’d had a quid for everyone I’d missed!

Once the inverse range is broken (38.2 or 61.8% of previous days range) VERY HIGH PROBABILITY that previous days low/high will be test. Once that has broken VERY HIGH PROBABILITY that price will go low/high targets of 127.2 and 141.4 extentions. (Retail will probably shoot for 161.8)

GBPJPY

Needless to say these levels are hotly contested, but there is nearly always a pullback/retest.

If there is no pullback then just let the train leave the station without you. Move on, look for another trade.

EURAUD Pullback on 15 Minute chart

This is another example of a trade I like to take. We wait for a small area of demand (or supply to form). Then we wait for the pullback to that level.

EURAUDPB

Why wait for for the pullback? We want to see how price action performs when price returns to that level. The pullback will be the higher probability trade.

euraudpb2

If there is no pullback, then jog on and look for another trade. Don’t every feel you have missed out, but if a currency or indices is going to trend well it will always usually provide a pullback opportunity.

In this example your stop would be the red line before the ‘demand’ level. If the demand level is too wide, for you to comfortable with then you many be able to find a tinier liquidity area on a the 1 minute or 5 minute chart.

This was a good entry level due to rejection of Previous Weeks Low (PWL) twice with very low risk

Another ‘Pullback’ Trade EURUSD

Here is another of those ‘pullback’ trades. This time to demand. But its not that ‘clean’ looking possible due to a quiet trade time after the London close (6PM UK time – not a good time to trade)  and there not being much ‘headroom’ due to overhead five minute liquidity.

EUROUSD

Also ‘sources were reporting ‘note offers’ at 1.146 (just off the chart) so price was probably chasing after that.

Trading The Pullback

I see this pattern over and over and over again. And it doesn’t just work with supply (bearish) but with demand (bullish) situations.

Always trade the pullback into supply or demand. Why? You don’t really know its a supply or demand area until you see a reaction to it!

supplyEUR

This little reversal could have bagged you 20 pips on the $EURUSD, and 20 pips isn’t a bad little move. But bear in mind this is a contra trade on the 15 minute chart, considering the trend, determined by the long term guppy is upward and (arguably) price is pulling back and probably going to go higher.

Your stop would be a tight stop above the grey ‘supply’ area.

I will be posting more about supply and demand, and in this example I’m using an indicator. Now an indicator doesn’t highlight supply and demand properly but it does ‘simulate’ it quite well. What do I mean by that? Well a ‘supply and demand’ indicator will highlight pivot highs and lows, but these are not actual S&D areas, but pullbacks into S&D areas, which is why the kinda work.

Ideally you should manually identify areas of supply and demand on the chart