Bulls Cornered at Historic Oversold Zone - Spring Loads📊 To see my confluences and/or linework, step 1: grab chart, step 2: unhide Group 1 in object tree, step 3: hide and unhide specific confluences. 🎨
🎯 6A1!: Bulls Cornered at Historic Oversold Zone - Spring Loads
The Market Participant Battle:
Bears have systematically trapped bulls into a proven demand zone (Point 2 at 0.65880), creating a powerful compression pattern that's about to snap. The numbered reference points on the chart show how Point 3 closed above Point 1, making Point 2 a battlefield where proven buyers are congregating. At Point 4, we're returning to this exact zone where institutional buyers previously defended aggressively. This is a classic case where oversold bears have overplayed their hand, and smart money is quietly accumulating for a violent reversal.
Confluences:
Confluence 1: Proven Buyer Zone & Anchored VWAP Deviation
The chart shows a powerful setup where price has returned to a proven buyer zone at 0.65880 (Point 2). What's particularly compelling is the anchored VWAP from Point 1, where price has pulled back to the 2nd deviation before bouncing above the 1st deviation. This is textbook mean reversion behavior indicating bears are exhausted and buyers are stepping in with conviction.
Confluence 2: Fixed Range Volume Profile POC Magnet
The Fixed Range Volume Profile from Points 0→3 reveals the Point of Control (POC) sits exactly where Point 4 is testing. This is institutional positioning at its finest - the highest volume traded area acts as a massive magnet pulling price back for accumulation. Smart money doesn't ignore these levels.
Confluence 3: Footprint Chart Bullish Imbalances
The footprint chart reveals stacked bullish imbalances with positive delta on large red bars - a clear sign absorption is occurring. On Friday the 19th at 3pm, we see positive delta on a massive red bar with price closing above a bullish imbalance. Bears tried to push through but were absorbed by aggressive buyers.
Confluence 4: Second-Degree Bullish Divergence
This is where it gets interesting - we have a double-layered bullish divergence. Price made a lower low at Point 4, but both RSI and MFI made higher lows. Additionally, we see candle-level bullish divergence forming. Both indicators are oversold at Point 4, creating a powder keg setup.
Confluence 5: OBV Breakout & Bollinger Band Squeeze
On-Balance Volume (OBV) has broken two down-sloped trendlines, indicating incoming buyers despite price weakness. Monthly VWAP shows price crossed under and is now back above, while price has been touching the lower Bollinger Band repeatedly - a self-similar pattern to previous major reversals.
Web Research Findings:
- Technical Analysis: Multiple analysts noting AUD/USD holding above crucial 0.6600 support despite weak employment data
- Recent News/Earnings: RBA surprisingly held rates at 3.85%, defying market expectations for cuts
- Analyst Sentiment: COT data shows fastest short covering in 4.5 years - institutional repositioning underway
- Data Releases & Economic Calendar: Fed cut rates by 25bp to 4.00-4.25% range on September 17, weakening USD
- Interest Rate Impact: Rate differential narrowing as Fed cuts while RBA holds - bullish for AUD
Layman's Summary:
Think of this like a rubber band stretched to its limit. The Australian Dollar has been beaten down so severely that even bad news can't push it lower. When everyone's betting one way (shorts), and the fundamentals start shifting (Fed cutting, RBA holding), you get explosive reversals. The smart money is quietly switching sides while retail remains bearish.
Machine Derived Information:
- Image 1: Trend channel setup showing Points 1-3 progression - Significance: Clear bullish channel break and retest pattern - AGREES ✔
- Image 2: Bollinger Bands with R/R overlay showing Gap Zones - Significance: 4.99 risk/reward ratio potential with clear zones - AGREES ✔
- Image 3: OBV/RSI/MFI indicator panel - Significance: Triple bullish divergence with OBV trendline breaks - AGREES ✔
- Image 4: Object tree revealing hidden confluences structure - Significance: Professional multi-layer analysis with VWAP and Volume Profile - AGREES ✔
- Image 5: Fixed Range Volume Profile visualization - Significance: POC sitting exactly at current test level confirming support - AGREES ✔
Actionable Machine Summary:
All charts unanimously confirm the bullish reversal setup. The combination of technical structure (channel support at proven buyer zone), volume analysis (POC magnetic effect drawing price), momentum divergences (RSI/MFI/OBV all signaling reversal), and footprint absorption patterns creates an A+ institutional accumulation setup. Entry at 0.66080 with stop at 0.65410 targeting 0.67045 provides exceptional 4.99:1 risk/reward with clear invalidation levels.
Conclusion:
Trade Prediction: SUCCESS ✅
Confidence: High
This setup represents a textbook case of market participants getting trapped at extremes. Bears have pushed too far into a proven demand zone, COT data shows record short covering beginning, and technical indicators are screaming oversold with multiple divergences. The risk/reward of 4.99:1 with clear invalidation makes this a must-take opportunity. When institutions flip from record shorts to covering, the momentum shift can be violent. Take the trade with confidence.
