HOW TO TRADE LIKE THEM USDCNH BAREBACK So here’s the second pair in the bareback edition- bare chart assessment based on psychology and price and time action.
This is a newly added pair to forex so I’d view the historical graph from saxo. The extreme is taking from that. And let me explain what this is. So high volume was added to get the pair moving maybe trillions of dollars as the candle takes up the length of the chart.
So I drawn a trendline from the high of it to reflect that price broke the high that candle
Thus this extreme line will serve as a guide as to the direction of the pair cuz just cus price broke above the line I feel we need to see how price response to the test before to say the pair is bullish. And we hit that confirmation. As I’ll explain.
Now price traded above this line. Then we get our first high rejection of the pair. As this is extremely important very much. As and since this is a newly forex pair this mean one can take advantage of it and ride with the banks early in the game as we all know time is everything in forex and being involved in a pair as it develops it unparalleled in regards to it fruitfulness.
So let me explain what’s is going on here as I’m already ready to join in this pair and you can too.
Alright
From the first top. We want to watch how price initially response to its first regression.
Note we can see it’s a double top but note this we see weakness in the bearish action and strength in the bulls reaction.
Look at the retrace. And note how price interacts with the extreme line(it resist the decline thus this is our sign the line is valued and its bullish as when price returned back up it went right through it with no reactions thus this is enough already to tell us HOW THEY ARE PLAYING THIS PAIR!!!
But also note the retracement from the looks it’s deeper than the .7 and we know a retrace deeper than the .6 is a sign of strength from the retracer. But also note how the bulls response from this retrace. It pull back with strong candles and no bearish candle out the dip. And not only this but it cont to rise after. Now this is important as when we see price return from a dip as such this reflects exhaustion the markets and we see a rest in direction or in this case a bearish respond but not a decline. As price push below the poc and got pulled back into the range. Aka a fake breakout or if u use a vwap a wap pullback . This is a sign that the market isn’t ready for a sell. Ex usually in a range market we’ll see two range dips before the official sell. So one shouldnt expect to really short a pair without these dips as we see currently on many pairs now as audusd eurusd as these markets are not a sale they are reducing overbrought conditions meaning there was too many buyers in the market so the market sells to balance it so the can cont to push price higher
Anyway so we see the bulls was able to push out the dip and continue to trade and when the bears came back and the bulls rest was short lived and the bull moved forward
Now moving on we see several reaction to the first top so we made a line and this will be a poc as we can see the second top used it as support and is now resistance.
So the second top is a parallel double top this means the market exhaustion itself thus we see the sell.
Now note this sell is of weak momentum and is a fake out. How I know? Well if we have a range of candles all the same direction as in the first dip by time price broke through support or resistance we want to see momentum candles. What are they, as we see in the red drawling.they are larger candles with a shave head and long or high tail depending on the direction and we see them about 3 to 4 candles out . So we have about 5 or move candle with no momentum candle thus this sell is a correction in the direction
Also looking at it the retrace is also a lil steep which is ok cuz the candle has weak volume .so we shouldn’t expect a reversal
what to do now? And how to trade?
We wait to see how price responds to the extreme area as this will be the first test (retest) as the first test is the best test as my teacher told me 🤷🏾♂️ and we are expecting a strong response this will be our long entry to hold and defend as price will continue to make new high.
