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Risk Disclaimer: Trading is risky! Never trade money you can not afford to lose! Site content is only personal opinion and never a Trade Recommendation! Futhermore the blog content needs to get reviewed to analyse whether it is up-to-date and still appropriate in the authors view.

Chart Pattern Analysis | Forex Manipulation

Index:



Forex Price Manipulation



Technical Chart Analysis and Trading Strategies

The Chart Analysis Legend includes the mainly used Chart Reading Patterns, Methods and Tools




My current shorter term trading strategy


Trading strategies and opinions have evolved and partly changed over time and will do so in future.

My current shorter term trading strategy is to read the intention of the Market Manipulators and to focus on their manipulative stop runs and faked mainstream trading signals at striking mainstream price levels particular at Highs/ Lows and Round Numbers in the Forex Majors and also others like S&P 500 (SPY), Dow Jones Industrial, DAX... 

However, It might also be argued that frequent price turnarounds at these striking chart levels are often due to large bank orders which capitalize on the one-sided order flow at key breakout levels to build up large positions which otherwise would lead to undesired price movements when done without the one sided order flow.

I currently do not use Fibonacci analysis, trend lines, SMA's  and many popular chart patterns.  Often these mainstream trading signals are false signals.

However, for the medium to longer term, it is very important to analysis the fundamentals of the currencies. I personally like the investment bank reports on http://www.efxnews.com, the realtime tweets of zerohedge and I really appreciate the analysis of Bill Gross and of Morgan Stanley's Hans Redeker




Manipulation of Popular Chart Levels



The main message of this website is just below:

Popular Chart Levels are often tacitcally misused for faked Trading Signals and Stop Runs by Manipulators in the short run before the fundamentals regain and the major trends resume.


Some Popular Trading Levels:

  •  Important Highs/ Lows
  •  Round Numbers


Market price often comes back to popular chart levels like Round Numbers and frequently penetrates them to trigger mainstream trading signals and to run for stops. Particularly, market Highs and Lows are important Manipulation points, where false price breakouts (false first breakout) occur to clear stop loss orders and to trigger breakout limit orders before market reverses back. Be careful with these mainstream trading strategies. Moreover watch out for pure stop runs at these chart levels, which can lead to a strong market turn around. In general, the first price breakout at important chart levels is often a false one.

Often a minor false price breakout or only a price touch of Round Numbers and comes with the first test of these chart levels to trigger close-by breakout orders and stop orders. The retracement to catch some stops of the breakout traders often gives the faked impression that the popular chart level holds as Support/ Resistance, thus encouraging mainstream traders to position accordingly. However, market often goes for a second test of the popular chart levels to clear the stop orders above/ below important chart levels before either retracing back or breaking through the price level targeting the next important mainstream level (stop order and limit order zone).

More in detail, if market price only touches (not really penetrating) the important chart level like Round Numbers and retraces back then a second test of this market level is likely to catch the stop loss and breakout orders at this support / resistance levels of the traders who already had positioned themselves plus the new traders who interpreted the prior hold of the support/ resistance area as a reason to enter the market.
However, if market price already had penetrated the important support / resistance level to catch most of the stop loss orders and breakout orders before retracing back (failed first breakout) then the chances of a second test of the important chart level would diminish as the intention of the market manipulators to catch the stop loss orders and breakout orders already got accomplished.

Moreover, a clean break through a striking trading level without an immediate price retest is seldom and if so then the chance of a retest in near future is likely to catch stop orders of the breakout traders and to minimize the chance of an easy trade with a small stop lose at important price levels. Furthermore, the reiterating stop triggering process at striking chart levels would be in favour of a clean breakout to happen more often in the absence of any market price manipulation.

In general, market price goes there where the stop loss and breakout orders are anticipated.


Read more:  Overview of the Forex Price Manipulation




Below and in the left sidebar:  EUR/USD analysis from the past



Forex Market Manipulation Analysis



Daily Chart Analysis of the EUR/USD - Stop Hunting



The two orange arrows on the top of the 5 min EURUSD chart below (last chart) show examples for the Stop Hunting- and Market Price Rigging process and it further illustrates the importance of breakout trading strategies. The recurring manipulative Stop hunting strategy in Forex is used by the FX Manipulators to fool breakout traders with the typical failed first breakout. The Market Price Rigging Manipulation via Stop Runs allows the Forex Manipulators to catch the stops of the breakout traders and thus this price rigging strategy most often prevents the typical breakout trader to successfully participate in the true breakout.

Most often at striking price levels, like - highs/ lows/ round numbers/ mainstream Support and Resistance levels -, the market price manipulators enforce the failed first breakout - stop hunting. The Stops of the breakout traders get cleared, who entered the market after their limit orders got triggered through the penetration of the striking level.

Furthermore, many stop loss orders of other traders got also cleared through the slight penetration of the striking chart level. After the price rigging strategy got accomplished and most stops of the breakout traders are already taken out of the market then either the true breakout occurs to catch and clear farther positioned stop loss orders of other traders at the striking level or market reverses to target the opposite striking chart level where many stop loss orders of the fooled breakout traders are located and new breakout traders will try to catch the trend again.

Read More in the Price Rigging and Manipulation Series

The highlighted Doji candles on the 5 min and on the 1 hour chart could have been used as trading triggers. There are also many continuation chart patterns on the 5 min chart (green circles) and an inverted Head and Shoulders chart pattern on the 4 hour/ 1 hour chart.

Consolidation pattern, Pivot Points, SMA,SR
4 hour EUR/USD Chart Analysis/ Patterns
Inverse -Inverted- Head and Shoulders pattern, neckline,Doji
1 hour Inverse -Inverted- Head and Shoulders pattern, neckline, Doji
Doji candle, Continuation patterns,Pivots
5 min Doji candle, Continuation patterns,Pivots

Weekly Support and Resistance

EUR USD Weekly Chart Analysis



Support and Resistance levels


eurusd daily support resistance forex
Daily EURUSD Support Resistance in Forex


The EUR/USD High of 2012


acted as resistance before this chart price level got broken (see red circle = breakout timing) and the yearly high acted as support in the beginning of February.

However, this important chart level got broken to the downside again with the second test on the 7th of February (First test was the green candle on the 5th of February).

The Chart illustrates the changing role of major support and resistance depending on price action.

The green ellipses on these charts show consolidation patterns, which most often act as continuation pattern like bear/ bull flags or pennants.


In addition, the orange arrows on the chart below illustrate the importance of these consolidation price zones as potential Support and Resistance levels. Furthermore, the charts also show the importance of Pivot Points, which often act as Support/ Resistance too. Another important tool of the chart analysis is the 61 % and 100 % Fibonacci Extension, which shows potential hidden Support and Resistance levels (see last chart).


Consolidation patterns, S/R, Pivot Point
4 hour Consolidation patterns, S/R, Pivot Point

Weekly chart update eurusd technical analysis
1 hour Weekly Chart Update EUR/USD Technical Analysis

Head and Shoulders pattern,neckline,eurusd
5 min Head and Shoulders pattern, Neckline, EURUSD

Pivot Point Trading

Daily and Weekly Pivots



Pivot Analysis




The hourly and the 5 min EUR/USD Chart below illustrates the importance of Pivot Points. The Euro traded between the weekly Pivot and the weekly Support 1. The weekly S1 provided support and the weekly Pivot acted as resistance.

Furthermore, the hourly Euro Chart shows a Continuation pattern (green ellipse - kind of Bear Flag). After market touched the 10 SMA  price went down, triggered the Continuation pattern and market price moved to the lower boundary of the trading range - weekly S1, whereby the Euro temporarily consolidated at the hourly 200 SMA (black dotted line).

The orange arrow shows that the consolidation price zone of the prior continuation chart pattern acted as resistance after the Euro temporarily breached the daily Pivot point and tested the consolidation price zone for the fist time. The second  test of the daily Pivot and the Consolidation price zone could not held the Euro (second test during a short time) and the market price moved further north to the upper boundary- the weekly Pivot point.

The 5 min chart below shows how the EUR/USD repeatedly failed to break the upper boundary (weekly Pivot). The lower boundary - weekly S1 - held after the unconfirmed break of the weekly S1, which created a kind of Hammer or Doji candlestick pattern on the chart. Another Continuation pattern and the 61.80 %  Fibonacci extension level are illustrated on the 5 min EUR/USD chart below.


Technical Chart Analysis EURUSD
1 hour Chart Analysis EURUSD - Pivot Points


Price Rejection Candle Hammer,Doji
5 min Candle Hammer, Doji and Pivot Points


Another Intraday example of the importance of the Pivot points on the 5 min EUR/USD Chart below



Trading Pivot Points in EURUSD



Pivot Point Support/ Resistance



The Pivot Points (Daily Pivot, Daily S1 and Daily R1) were important intraday Support and Resistance levels.


At 10:45 a.m. GMT market tested the daily Support 1. With the beginning of the new hourly candle at 11 a.m. the Euro tested the daily S1 again and market closed at this support level before breaking it for a short shakeout (Breakout Trading/ Timing with new candle-red circle). The same pattern approached at 4:25 p.m. at the daily R1.

The Euro formed a Continuation Chart Pattern at the daily Pivot Point before 2 p.m. (green ellipse) and market broke it with the new hourly candle. The breakout candle at 2:10 p.m. got confirmed due to the higher close of the succeeding candle above the high of the breakout candle.

The EUR/USD touched and successfully broke the daily R1 intraday Resistance. The confirmation of the breakout through the daily R1 led to a change from its role of resistance to support. The changing role from  resistance to support of the daily R1 can be seen after 3 p.m..


The continuation pattern at 4 p.m.(green circle) led to an unconfirmed breakout through the daily R1 after the 5 min candle at 4:25 p.m. closed at the daily R1 (red circle).


Euro Intraday Trading Levels
5 min Euro Pivot Trading Levels


Changing Role of Support to Resistance

Support and Resistance Trading



The Euro USD very often respected the different daily and weekly Pivot Points as support and resistance on the 5 min Intraday Chart. The daily Pivot Point held the sharp intraday downtrend after the Nonfarm payroll release today and the Euro USD reversed sharply up for new highs in the trading session. 61.80 % and 100 % Fibonacci extension levels also helped to determine intraday support and resistance zones.

The Euro moved only shortly into the 1.37 vicinity before retracing back. The daily R1, daily R2 and the weekly R2 beautifully show the changing role from resistance to support. The daily R1 was resistance at 7 a.m. GMT and after resistance got broken the resistance became support between 10 a.m. and 2 p.m.. Similarly, the daily R2 and the weekly R2 acted as resistance before the role changed depending on the vicinity of price action.  The chart formation at around 10 a.m. GMT might be seen as a small Head and Shoulder pattern at the daily R2 resistance.


changing role from resistance to support
5 min Changing role resistance to support


The below EUR/USD Chart shows how the monthly R2 Pivot point changed its role from resistance  (at 11 a.m.) to support after market broke this resistance level and confirmed the breakout at about 3 p.m..

Euro USD Pivot Points, S/R
5 min Resistance becomes support

Market Range Trade Setups

Trading a Sideways Market



Trading in a Range



Euro US Dollar market is in a sideways trading range.
Market is waiting for the Nonfarm Payroll Release on Friday, 01.02.2013.

The Euro US Dollar stayed in a sideways range and sideways market on the hourly time frame till now.

The daily Pivot Point and the weekly R1 Pivot held the market today. Fibonacci analysis and Pivot Points provided some possible trading setups in the sideways market to trade the market range in the EURUSD (see chart below).



Fibonacci studies and Pivot Points
5 min Fibonacci Setups and Pivot Point anaylsis



Another Example for a sideways trading range bound market


The Euro Dollar traded in the hourly consolidation range around the low of November 8th (see EURUSD Chart below).

The European session started with a Stop Run at 6 a.m. GMT. This false breakout on the 5 min Euro chart led to a price reversal of the EUR/USD. Market moved down to the 1.27 level in an impulsive move. However, market price action was capped in the range of this impulsive move during today's trading session.

At 1.10 p.m., the Euro Dollar reversed at the 1.2735 confluence resistance level because of the Fibonacci cluster due to the two 100 % fib extensions from the previous swings up, the daily pivot point and also the penetration of the recent high at 1.2730 on the 5 min chart (Stop Runs above recent high and the daily Pivot). The confluence resistance would have provided a good Trading Setup for a short entry in the market.


We had many continuation patterns (green circles-Pennants, Flags, Ledges), which could have guided today's trading setup decisions. Furthermore, the red circles show where the Breakout Timing strategy could have been applied and the orange arrows show where the Support/ Resistance through the consolidation price zones led to a market reaction. The Fibonacci trading levels also helped to find trading setups in regards of market turning points.


Trading Signals,Support,Resistance
5 min Trading Setups Euro Dollar

Trading the Market High of 2012

EUR USD Market High



After the Euro USD broke out of the larger consolidation pattern on the daily chart last week market approached the high of 2012 yesterday at 1.3486. Market closed at the high of 2012 yesterday and today the Euro broke through it (Breakout Trading/ Timing- see red circle). A similar pattern occurred at the monthly R1 (red circle), where the daily candle also closed at the monthly R1 before market broke the monthly R1 with the next daily candle.
Currently, the Euro USD is trading at the monthly R2.



Daily Support/ Resistance
Daily - Support/ Resistance




Today's rise started with a kind of bull flag between 8 a.m. and 9 a.m.. The Euro USD rose to the monthly R2 at 11 a.m. where market temporarily found resistance. Market broke the monthly R2 with the beginning of the new hourly candle at 3 p.m.. The 5 min candle at 3 p.m. closed at the recent daily high and the next 5 min candle broke this resistance (red circle-Breakout Timing). The  monthly R2 changed its role from resistance to support and held the market so far. 


Euro USD Pivot Points, S/R
5 min Euro USD Pivot Points, S/R

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