Cancellation of “Head-and-Shoulders” Pattern. Bears trapThe "Head-and-Shoulders" (H&S) pattern is considered a powerful trend reversal indicator. However, it can also become very costly for new traders. Yesterday, the S&P provided a great example of H&S cancellation. Traders who entered short on the break-out of the shoulders line (and Monday's low) incurred losses after the price returned to the previous day's range and rallied all the way up. Such scenarios happen more often than you might think.
To avoid being caught in such traps, it is important to consider two things:
1. Higher Level Context : In this example, the H&S pattern formed on the hourly time frame. But if we zoom out, we'll see that on the weekly chart, the price is in a strong uptrend, currently making new historical highs. This is a very bullish context, with buyers having full control over the price.
2. Price Behavior on the Break-out : Upon confirmation of a reversal pattern, you should expect sellers to jump in and drive the price down as fast as possible. It is "abnormal" to see the price returning to the previous range and gaining acceptance. This is a trigger that something is not right.
Some people will add volume analysis on the break-out, but I’m personally not a fan of it, especially for SPY.
Traps
US30 - NFP day - Welcome to September Hola !
Happy Friday traders - Mid Cycle of the 3rd quarter for 2023
As mentioned in my previous post, US30 gave us bullish momentum throughout the week and during NY session we seen the bears take over completely. Am i the only one seeing all the sellside liquidity getting built ?
Im in two minds with it being NFP today - shit is going to be wild.
Thinking the 35007 area is hotzone(Jul to Aug Flipzone to create bearish momentum). If we get a clear MSB and retest i will go long. If the bearish flipzones are respected. We may attack last months lows before the bull rush takes over.
I tend to stay away from major news events like this. Market can be really volatile and sweep both sides before moving in the intended direction
Best of Luck - Follow your rules !
EicherMotors Bear trapEducational Idea:
Most of the Novice conventional traders use support and resistance levels. If the support breaks, they tend to short-sell the scrip & try to profit out of it. And, if the resistance breaks, they go long. But the majority of the time, they become a victim.
Let me get this straight.
Let's take an example, in this case, Eicher Motors. When Eicher Motors is close to the support pivot, let's say, everyone(Traders and Investors) will take a long position. Since everyone is buying the stock, there will be a lack of sellers & the price will shoot up suddenly in search of the sellers, and the investors will have no choice but to buy for a higher price since there is a huge demand.
But the thing is, the investors are much smarter than that. When everyone is long at the pivot (or Support Point), they will just short the stock, using all the buy orders provided by the traders and drive the price down, breaking the pivot (Support). This will create a panic for the traders as the support is broken. In a panic, they will square off their position for a loss, and to cover their loss (creating sell orders), they will just short the stock. (Again Creating new sell orders, at a lower price)
Now, the investors got what they wanted, i.e, fresh sell orders at a lower cost. They will just unload their short positions to the traders who are taking fresh short positions and will start accumulating the quantities they want for their portfolio at a much better & lower cost.
And then, the stock price goes up, giving investors their returns and traders, well, their losses.
Please Note, This is just an Educational Idea. Trading involves risking capital. Always protect your capital by keeping a strict stop-loss.
Happy Trading & Investing.
Perfect example of a choppy market (consolidation)Market's do not trend all the time. After a strong trend in either direction, the market goes into consolidation mode where it chops between a range for weeks to months trapping both sides.
It is best to sit on the sidelines as getting the direction right in such a situation doesn't provide the best risk:reward
AUDCAD SIMPLE PRICE ACTION TECHNIQUE by Constantino
Principles of Professional Speculation" written by Victor Sperandeo (Trader Vic ), analyses one of the powerful topBottom reversal techniques.
Trader Vic describes this technique, "In an uptrend, if prices penetrate the previous high, but fail to carry through and immediately drop below the previous high, the trend is apt to reverse.
" The converse is true for a down trend.
This pattern is also called "spring." The 2B setup looks like a micro "M" pattern and signals trend reversal when prices stop making higher-highs in an uptrend.
The 2B pattern rule is when prices make a new high or new low; they pull back for a healthy retracement.
After retracement, the price tries to re-test the new high or new low.
When this test of new high or new low fails, and it does not maintain the prices above the new high or low, it signals a potential trend reversal.
This setup is very powerful and signals the beginning of a correction.
Trade: The market attempts to test a recent new high or low, but does not hold the prices above this range.
Trades are entered to sell the low of the bar trying to breakout or buy the high of the bar trying to breakdown.
Target: The target is usually the "swing low" prior to the new high for 2B Buy setup or "swing high" prior to the new low for 2B Sell setup.
Stop: Protect your "long" trade entry by placing a "stop" below the recent low and protect the "short" trade entry by placing a "stop" above the recent high.
Understanding News ManipulationIt is crucial to understand the price action prior to a high impact news event.
Analysing the range to the left beforehand can help you determine what move is likely to come next.
In this example, we saw the price was driven down by the bears to stop out buyers, only to reverse immediately to the upside moments after the news had been released.
By studying and acquiring knowledge like this, you can predict market moves that are likely to come with fundamentals.
Find the liquidity and trade it, or be the liquidity.
USDJPY: High WipeThe high wipe had to happen, we couldn't sell simply from a trendline breakout.
This was a trap, now that the trap is out of the way we can look for sell opportunities.
I expect one last purge of the highs before we collapse into equal lows.
Leave a comment and/or message us on how we can improve and provide better content, we are open to suggestions to create a better experience for you!
Keep in mind that the analysis provided is not 100% accurate and that you can never be certain of the markets. This information given is not financial advice, always do your own research.
Thank you for reading,
Cheers to many pips!
Learning Parallel Channel TrapsSometimes we can get so caught up in the fear of missing out on the breakout that we forget it could be a trap.
It is always crucial to listen to your intuition when you see these easy setups because more often than not they are more complex than they seem.
In this example, a breakout occurred and buyers put stops below the last structure, a few days later this structure got raided for liquidity.
Once the liquidity was gathered we began to see the true move to the upside.
Do you see this often in the markets?
Stop Loss HuntingInstitutional investors have a profound impact on financial instruments prices because of their large volume trading activities. They can greatly impact the price of financial instruments, however making a material impact and hence decreasing liquidity to the point where there may be no one to take the other side of the trade is not something they desire. To fill their large in size orders with better price levels, Institutional investors need liquidity, they cannot just enter a trade at once, but they split trades over time and slowly have to build a position by hunting for liquidity. One of their strategic approach and the best way to get liquidity without making a material impact of the price and get filled in better price levels is Stop Loss Hunting .
A stop-loss order is an order placed to buy or sell a financial instrument when it reaches a certain price with the aim to limit loss on a position or protect profits.
Where do we usually place our stop orders? For a long trade example, usually we set them just below a support level, a trend line, a longer-term moving average, previous day low or a specific ATR percentage etc, which are highly predictable.
Institutional investors simply need to trigger stop loss orders of thousand of traders and since a key level is borken new traders joins by entering positions, making them take trades in the wrong direction, which as a result creates a huge supply with enough liquidity to absorb Institutional investor's demand with better prices
Some examples
Stop Loss houting can be observed frequently
⚡️ Understanding Breakout Traps ⚡️If we see a pattern form that retail likes to trade,
It is highly likely that this pattern may get manipulated.
The reason these common patterns get manipulated is
because of liquidity forming.
Banks want to make sure they can create enough liquidity
for themselves to get positioned nicely in the market.
They do this by driving the price up/down into stop loss areas.
To avoid being caught out we need to sit on our hands,
wait for the stop loss hunt to occur before we go-ahead
with our initial position bias.
Bullish move into Big short push on UJ Could see a bullish move into a large bearish push on UJ for a downtrend continuation. Should see a large fakeout just after ATR n volume has drop significantly in the upward direction with a large spike in volume and atr after the move. Dont get caught in this move as this is the trap that is due to turn an accumulate liquidity in the market for a bearish push.
DXY : Watch out for TRAPS in the FX-Market!Hey tradomaniacs,
We`ve got to be very carefully again as I see traps being prepared in the market.
Lots of retailers are currently looking for shorts in Major-Pairs such as AUD/USD, EUR/USD, GBP/USD and NZD/USD to catch the peek while CoT-Data are showing still a strong long-positioning of retailers.
We could eventually see a move down of DXY (US-DOLLAR) in order to stop out the long-positions and to attract retailers to sell the peeks.
This would give the big players enough liquidity to fill their long-positions.
With Biden as the President we can expect a stimulus-package in the future which means more liquidity for the market and so an inflational affect 👉 DOLLAR short.
Nontheless we need to look at the Senate aswell which is very important.
If the Republicans win the Senate we might see a very good chance of another rally in the stock-market as they will probably not accept Bidens tax-increase.
In case of Democrats winning the seats in the Senate we could see the "blue-wave" in form of a sweep and so quick decision making.
The best scenario would be to see DXY (Us-DOLLAR) to retrace with the opening in order to attract the sellers.
Just be careful with quick trade-decisions now.
Let`s see what happens.👌
LEAVE A LIKE AND A COMMENT - I appreciate every support! =)
Peace and good trades
Irasor
Wanna see more? Don`t forget to follow me.
Any questions? PM me. :-)
Liquidity Traps, and hidden ordersTraps : When price is manipulated in order to capture liquidity, with misinformation, for instance in this case the buy orders @ 139.800 were completely hidden from the market, meaning information is not available at all for retail traders, why did they do this? In order to accumulate liquidity and give fake hopes to buyers, accumulating all positions with "Fake triangles" and fake breakouts. And then killing all...
What is what I noticed that gave up the trap?
1) The price entered a big resistance level with many open sale positions on the oder book, so it was extremely hard to break, however the price was still trying to go up
2) The price wouldn't go down, thing is different as why wouldn't it go up (of the huge resistance sellers had with open orders), there was no open buy orders @ 139.800, yet the price was not going down, this meant a huge hidden buy order was doing the dirty job...
3) The price entered a range, usually after finding such resistance, the price will fight a little and then fall straight down, well the price not only fought, but fought for 7+ hours, and accumulated around 4.7% in the range between 139.800 and 139.850 of all buyers in this zone. Not any sellers, why? Cause they are not going to kill sellers... The manipulator is a seller
4) Fake symmetrical triangle and resistance breakout, the price did go up, however for all the liquidity trapped in this zone the price should have exploded, not moved that little, overall even find some resistance like it did after breaking the symmetrical triangle
We are never shown the whole picture as retail traders
The Big Short & Long meets BitcoinI present this chart as it consolidates all my previous charts, with annotation and two vital indicators I had not published.
So you will notice on this chart the various themes I have been discussing, including the most recent 'Flag' analysis which I will attach below, but also two indicators at the bottom.
MFI and CMF indicator. Now is not the time for an educational session however; if ever a time when uncertainity is looming with such a strong potential for a 50/50 outcome, that the MFI and CMF is to be used, IS NOW.
For those well versed in trading will see significance in the MFI, CMF and the recent price dip. Also, on each indicator we are really starting to see the very early warning signs of what is most likely to play out.
But for reasons of accountability, I will present the evidence and allow the Jury to decide for themselves. This is the last chart I will post until we have 'the big move'
GBPJPY - SHORT (TRAP)This pair my friends is looking to have a perfect trap setup. if price touches the "resistance" (in quote because they are just the bulls taking profits), and immediatly rejects it, it will definitely become a trap. Wait for price to break and retest that level and enter short with strenght and close your position with 150pips very fast.
Just follow the arrows and wait for price action. Don't trade before the break and retest! And don't go long lol.
GBPUSD Is BACK?!Price has came back to the same level as previous chart that i have attached.
Last week, price came to this level and bounced up with more than 120 pips.
Followed by another 120 pips drop too.
So there is an possiblitiy that price will bounce up again BUT there is also possiblity that it is an TRAP move to inicite buyers to jump in only to get stopped out.
I will wait for the price to BREAK the support for the confirmation of a trap move.
BitcoinCash will crashBitcoin Cash (BCH) experienced a serious mining anomaly today. The network failed to produce a single block in a five-hour period and it didn’t even cause a significant transaction backlog.
***Bitcoin Cash usage is still lagging, show the latest blockchain event, where miners were unable to discover a block for hours. The Bitcoin Cash network returned to regular block production as of 8:00 UTC on Thursday, with a five-hour gap in block production. The event happened after block 620025, and the next block number, 620026, took more than five hours to discover and propagate.***
Are this opportunity for miners to change the game ? To share Mining power to some other networK? Jes it is, if this block lag continue the price will fall down 100%
Short I starts form 395-385
Short II starts from 375-370
LASTCHANCE starts from 355-345
Target price is 300-290
**STOP IT IF PRICE BRAKE 400**
This is not financial advice this is just idea
Ucad trap 1/4hThe USDCAD has a double trap, on H4 and H1, meaning they are both the same trap, and can be traded and treated as 1.
The large candle for me is a confirmation of the order block, luckily for us the next order block is only 80 pips away.
My preferred entry would be at the retest of the bottom of the consolidation area on H1. which alligns with 50-61 fib.
I would add another entry at 1.33 which is a pshycological round number and alligns with the 70.5 fib.
Final TP would be just above the order block at the bottom. I actually scaled back to M15 to determine these zone.