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Stop Hunting using Sentiment and Market Structure

  • #81
  • Sep 1, 2019 8:35pm Sep 1, 2019 8:35pm
With a U.S. Holiday and most tradings desks being closed tomorrow - expect low liquidity.

Also - Be cautious of news like the attached, it is quite misleading. Sure if you count this year and last year, then it is "multi-year", but it sounds a lot more....

We are FAR from breaking 2017 lows.

Do you think this kind of release meant to get trend followers on board for a ride south?

I don't use this type of info as a trading signal but I do stay cognizant of it.
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD_NEWS.PNG Size: 174 KB
  • #82
  • Edited 11:20pm Sep 1, 2019 8:42pm | Edited 11:20pm
Quoting fxmir
{quote} It will fill up liquidity gap then going down again, possible sell area 1.1038-50 I think
I also want to point out the liquidity gap that fxmir was talking about.

It is the zone highlighted where buy orders were thin and price moved fast through. Volume profile traders would know this as the very thin area between distributions where little volume has taken place.

Price has a tendency to fill the void at some point in the future and it's the basis of the structure for which I typically like to take directional trades.
Attached Image (click to enlarge)
Click to Enlarge Name: liquidity_gap.PNG Size: 70 KB
  • #83
  • Sep 2, 2019 5:32am Sep 2, 2019 5:32am
Quoting SentiFX
{quote} I also want to point out the liquidity gap that fxmir was talking about. It is the zone highlighted where buy orders were thin and price moved fast through. Volume profile traders would know this as the very thin area between distributions where little volume has taken place. Price has a tendency to fill the void at some point in the future and it's the basis of the structure for which I typically like to take directional trades. {image}
So what's you bias?
Long to close the liquidity gap or you wait for the gap to be closed and than short untill next monthly demand zone that is far below?
  • #84
  • Sep 2, 2019 8:54am Sep 2, 2019 8:54am
Quoting Merka
{quote} So what's you bias? Long to close the liquidity gap or you wait for the gap to be closed and than short untill next monthly demand zone that is far below?
EURUSD has a downward bias based on orderflow - as you can see at current PA new stops were taken. But can't enter here for a sell side trade.

I am waiting to see how retail positioning changes from Sunday to NY Close tomorrow, then I'll start looking at market structure. Usually I can get a good idea of what is happening on the charts just by looking at the sentiment shift - how fast and by how much.

Then it's just a matter of how much you want to risk, how you enter and how you exit.

The more stars that align (confluence) of retail being on the wrong side of the trade, clear directional orderflow, seasonality, currency strength across currencies...etc... the higher and higher your probabilities of a successful trade. Just one of those elements could warrant a trade, but again the probabilities are more in your favor if you can at least see an alignment of retail being opposite of orderflow. I risk more for very high probability trades.

And always remember - news trumps charts. Trump tweets trump charts. NFP trumps charts. Interest rate decisions trump charts... etc.

So we trade the probabilities and embrace the variance of our edge winning more that it loses over time.
  • #85
  • Sep 2, 2019 9:03am Sep 2, 2019 9:03am
Quoting SentiFX
{quote} EURUSD has a downward bias based on orderflow - as you can see at current PA new stops were taken. But can't enter here for a sell side trade. I am waiting to see how retail positioning changes from Sunday to NY Close tomorrow, then I'll start looking at market structure. Usually I can get a good idea of what is happening on the charts just by looking at the sentiment shift - how fast and by how much. Then it's just a matter of how much you want to risk, how you enter and how you exit. The more stars that align (confluence) of retail being...
Thanks

Can you trade without your software as us?
Are you able to detect retail traders SLs and sentiment without your software?
  • #86
  • Edited 10:20am Sep 2, 2019 9:41am | Edited 10:20am
Quoting Merka
{quote} Thanks Can you trade without your software as us? Are you able to detect retail traders SLs and sentiment without your software?
Yes I can trade with just naked charts (been doing this a long time). But I also learned that you need as much edge as you can get to increase your chance of success.

In futures, you have the luxury of seeing how much volume is traded at any given time, and can see what areas volume is highest. In Spot Forex, we do not have that luxury. We don't know how much is transacting, we can see where clusters of value are taking place and how price moves out from there, but we don't have the inside knowledge of the volume taking place.

Retail is a liquidity provider. Retail loses often. That is a huge source of alpha.

You could visit various sites and keep track of the changes over time and gain the sentiment edge.

Data and tracking alone are just the first step, you have to think about what you're seeing and what that means just as you would when analyzing a price chart. You don't just enter short if retail is long. At some point during the week retail typically realizes they are wrong and because of FOMO, they pile in the opposite direction thinking they are now in line with order flow and that's when we strike with a vengeance to trade their stops for our profits.
  • #87
  • Sep 2, 2019 5:15pm Sep 2, 2019 5:15pm
Current Retail Sentiment Snapshot going into the trading week.
Attached Image (click to enlarge)
Click to Enlarge Name: 20190902.PNG Size: 61 KB
  • #88
  • Sep 2, 2019 5:35pm Sep 2, 2019 5:35pm
I want to point out, you no longer see EURUSD as a huge bubble, but it is tucked away behind AUDUSD and NZDUSD.

This means that EURUSD may still be a sell but the majority of retail have now been stopped out. Short with caution.

If I had to take a EURUSD trade, I'd be more interested in the liquidity gap fill at this point if price action indicated the order flow was in favor because the easy money has been taken out.

Currently awaiting to see how retail reacts after London and NY opens. Watching USDCAD and GBPUSD.
  • #89
  • Sep 2, 2019 11:45pm Sep 2, 2019 11:45pm
Hi SentiFX

Can you share with us where can i get the sentimental data. Thank a lot.
  • #90
  • Sep 3, 2019 3:59am Sep 3, 2019 3:59am
Quoting SentiFX
I want to point out, you no longer see EURUSD as a huge bubble, but it is tucked away behind AUDUSD and NZDUSD. This means that EURUSD may still be a sell but the majority of retail have now been stopped out. Short with caution. If I had to take a EURUSD trade, I'd be more interested in the liquidity gap fill at this point if price action indicated the order flow was in favor because the easy money has been taken out. Currently awaiting to see how retail reacts after London and NY opens. Watching USDCAD and GBPUSD.
Great Info SentiFX, your analysis helped me save some pips and GBPUSD crashed after your post, USDCAD did some, but I am sure this is, because tomorrows BoC IR decission. Did you made any trades?
Looking for profitable short term trades ...|
  • #91
  • Sep 3, 2019 4:16am Sep 3, 2019 4:16am
I miss the days I used to 1m trade like that, you must be traned enough to see stops like that. Once it clicks you just see it, hard to explain to others
Get Rich or Die Trying
  • #92
  • Edited 8:13am Sep 3, 2019 8:03am | Edited 8:13am
Quoting Js3mwtRc
{quote} Great Info SentiFX, your analysis helped me save some pips and GBPUSD crashed after your post, USDCAD did some, but I am sure this is, because tomorrows BoC IR decission. Did you made any trades?
If you don't think the Banks & MM's stalk the liquidity of retail.... look at the previous bubble post where retail was on the wrong side of GBPUSD and USDCAD, and look at the charts now. GBPUSD was a strong sell (because retail was heavily buying) and USDCAD was a strong buy (because retail was heavily selling).

Also notice the single liquidity grab from any retail short sellers in the swing down and then price moved back down again. Does this mean either pairs are going to continue in their current direction? No. It was a trade. Have to see how retail is positioned going forward.

Over and over.... rinse and repeat.

P.S. Js3mwtRc - Glad it saved you some pips!
Attached Image(s) (click to enlarge)
Click to Enlarge Name: GBPUSD.PNG Size: 75 KB
Click to Enlarge Name: USDCAD.PNG Size: 80 KB
  • #93
  • Sep 3, 2019 2:37pm Sep 3, 2019 2:37pm
i think we can see euro usd touch 107780
  • #94
  • Sep 4, 2019 2:28am Sep 4, 2019 2:28am
Once retail stops have been flushed, what are the options?
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot_20190904-022430.png Size: 105 KB
  • #95
  • Sep 4, 2019 3:51am Sep 4, 2019 3:51am
Happening now, quick spikes up to 1.10 then resumption of downtrend I'd imagine - and against the currently 85% retail buyers
  • #96
  • Sep 4, 2019 3:55am Sep 4, 2019 3:55am
Quoting SentiFX
Once retail stops have been flushed, what are the options? {image}
filling liquidity gap?
  • #97
  • Sep 4, 2019 5:09am Sep 4, 2019 5:09am
Quoting SentiFX
Once retail stops have been flushed, what are the options? {image}
It should fill the gap. It has a good momentum

I have some questions for you SentiFX, I hope you can answer.

For the price to fall and take stops does a rapid drop in the positions of sellers overtaking the fastnes of buyers who buying less count the same for a downtrend? How an uptrend/downtrend works better? Is it the same?
Looking for profitable short term trades ...|
  • #98
  • Sep 4, 2019 6:07am Sep 4, 2019 6:07am
Quoting SentiFX
Once retail stops have been flushed, what are the options? {image}
Good job you are doing here SentiFX,

I like the way you think - it aligns with the way I think.

Regards and Stay fluid,

Ty
My job: I speculate and manage risk.
  • #99
  • Sep 4, 2019 6:58am Sep 4, 2019 6:58am
Those who called the liquidity gap fill were right on target.

A combination of retail stops grabbed .. retail unloading from the big pile in (big bubble shrunk drastically) and intermediate order flow was the clue.

If you had the courage to start scaling in after the impulse move to the downside, you would have got in at wholesale and add as price showed you were right.

I also want you to think at this point, if smart money were to believe EURUSD is a sell over the next week are two, would they drive price up? Why?

This was a high probability trade.

Anyone else take this trade?
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot_20190904-064958.png Size: 105 KB
  • #100
  • Sep 4, 2019 7:01am Sep 4, 2019 7:01am
Quoting Js3mwtRc
{quote} It should fill the gap. It has a good momentum I have some questions for you SentiFX, I hope you can answer. For the price to fall and take stops does a rapid drop in the positions of sellers overtaking the fastnes of buyers who buying less count the same for a downtrend? How an uptrend/downtrend works better? Is it the same?
JS3, Im not sure I full understand the question.
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