I have the 4H and 2D charts to explain the 4H distribution and major upcoming downtrend. Let´s first establish where we currently are with a slower timeframe. I believe that the 2D chart is a Wyckoff distribution. This chart is a bit tricky to draw, we have to think a bit outside the box with this one. Nonetheless, I believe we are on the cusp of the BU and price will continue its weekly established down trend (look at the weekly timeframe, I believe we were in a pullback and now it will continue the established trend).
so, now that we have established that we were in a distribution phase in the daily chart and that the rally that started on November 22, 2021 was the BU of the daily distribution, let´s zoom to a faster timeframe, the 4H chart.
Per my trading, one of the things I need to see in a distribution is the 3rd rally, meaning the first rally was the BC, the secong would be the ST that touches the resistance zone or creates an UT, and the third and final rally creates the UTAD. Preferably we want to see this third rally to make a HH and then drop. This third rally is also called the second point of excitement, where it make a final push-up trapping Longs, and then drops. The first point of excitement is the BC. The only things that is a red flag is the lack of "heavy" selling volume, but this could be because we are at the end of the year and not many traders are in the market. Nonetheless, we do have an increase of supply through out the UTAD reaction.
I´m including the RSI indicator for the following reason. I don´t use the RSI indicator, but I have studied it under Andrew Cardwell (Dr. RSI). One of the points he mentions is that Up-trends trend within the 80-40 region of the RSI, and downtrends trend within the 60-40 region. It is very interesting to see how the RSI shows this pair in both the 4H and 2D chart under the 60-40 region of the RSI.
Trade active
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Sell limit @ 1.6630 Stop loss @ 1.6690 Take profit @ 1.6100
Hi Sergio, do you think the distribution is in play still? I've just studied Wyckoff a tad and respect it but prefer ElliottWave as it fits my style and thinking better. To some degree I've been looking to find ways to combine there two or parts at least and have found that UTAD/Spring often sync well with a wave C when SC have the marks of being wave 3. Anyway, I think this one still leans towards more downside, although I don't rule out that you 4h UTAD may turn out to be just UD (or if it's UT) and UTAD still to come. I could see it continue strait down from here as well though. I'd say that it depends on how long the false expectations of ECB starting to tune in hikes towards the end of this year finds fuel. In my view, it wont happen, not even during 2023.
SergioFXtrader
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@viking-EW, no, i totally messed up on the reading but shoot me a PM and i´ll send you my new reading
SergioFXtrader
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Traders, let me know what you think. :)
lucaparo32
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@SergioFXtrader, nice analysis, but if i want to entry, where you advise to entry for the down? Now or more up?
SergioFXtrader
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@lucaparo32, I´m placing a sell limit at 1.6630, SL 1.6690, TP 1.6100.... a 60 pip risk for a 500 pip reward. it is a bit hard, for me at least, with slower timeframes to accurately predict how high it can retrace. Thus I have to give it a little room to breath... I chose 1.6630 because there is a supply zone in that area. But price can move up to the mean of the TR, just look at the 2D chart before the SOW and what stablished the first LPSY.