I was just comparing accumulation setups of Crude and EURUSD
. This is not an attempt to call where price is going. I keep seeing loads of bullish
moonshot calls for EURUSD
. It seems many traders really struggle with momentum. Why did Crude accumulate, pop up, and then make new lows? Might it be that the momentum generated by the oil
crash was still too bearish? Like I said, it's really hard for people to visualize this concept, so I'll use an analogy that everyone can relate to. Momo is like a heavy steel door with a loose door hinge. When it's opened, it will slam shut because of the weight of the door that generates a force greater than what the hinge can offset. If you know the door will slam, you might attempt to slow it down by pushing on it a bit just before it shuts. This causes the door to briefly open again, but not enough to cause the slamming sound. In doing this, you've offset momo. This is basically the same concept of momo with securities. If you're analysis is conducted only on smaller timeframes, you will be caught by momo. What is the purpose of the accumulation phases seen on both of these charts? Does it not make logical sense that we accumulated to slow down the momo of the heavy steel door? I posted more about this on my blog. http://www.tradevulture.com/blog
where I allowed momentum to get the best of me.