Stop Hunting using Sentiment and Market Structure

Correct NZDUSD by itself is not in any of the extreme zones and actually hasn't been in a long time. This was just an example of how sentiment clusters when looking at baskets.

If you look at the chart here, that spike candle was during the 1st hour after NY close. (Futures markets are closed during that time also)

Typically this is the absolute worst time to trade or be in trades because spreads are 10x or more during this time and your broker can easily stop hunt you doing this period in the market. It actually happened to me with UJ a few days ago and was a reminder why NOT to have trades on during that time unless you have a really wide stop.

I usually want to see shifts in Market Structure OR Sentiment on Monday or Tuesday. Shifting like this during the 1 Hour window after NYC close is not a good sign. So had you been in the trade or thought about getting into it... you'd want to look for a graceful exit (like the red rectangle area). This happens over and over on the charts and it's the best way to exit instead of panic selling as this is normal PA behavior. Price typically pulls back at least 1 time to where trapped traders were. If not, it will in the future for those with deep enough pockets to hold on for the ride.

That being said, if you were the trapped trader, after seeing the clear MS break in the hours that followed, you'd look for that graceful exit and reverse your trade in the same area. This is a professional way of trading once you understand the key areas to get in and get out - and know when your idea is wrong and where you could flip and reverse if you wanted to ride the wave in the proper direction. NU looks to be heading to the LG fill at the red line. But again, retail isn't really strong on either side of this trade so they aren't a liquidity provider. I personally wouldn't be interested in it.

Anyway, NU would have just been a MS trade and not a Sentiment combo if I wanted to trade it. The best combo trades are pairs where sentiment goes from extremes and shifts from those extremes to opposite extremes regularly.

Context is important when analyzing Sentiment and Market Structure.

When you focus on specific pairs every week, you'll know where they were and where they are heading.

So I randomly took the strongest pair from the previous NZD basket (NZD/AUD which was showing a "strong sell) - well since the pair is AUD/NZD - that would be inverted... meaning strong buy.

But let's look at how AUD/NZD moved throughout the month so far. As far as Market Cycle is concerned, it may be nearing it's max and the downtrend may start soon.

Notice April 7th.

Notice how AUDNZD was in the Strong Sell Zone on April 6th but shifted over the Y axis by April 7th. The shift over the Y axis is a signal that the herd could be shifting direction and if Market Structure aligns with that... then we want to get in.

Market Structure also confirmed. There was a Higher High and a pull back. You would have entered on the pull back.

Notice how over the next few days... the Sentiment Bubble worked it's way to the STRONG BUY zone. But price has been moving up the entire time. The shift across the Y was the first signal. The shift across the X axis towards the Strong Buy was the second, and the Strong Buy zone entry on April 14th was the last.

After about 3+ days in a zone we want to start looking for the next shift and market structure change. It's at those times we catch the near tops and bottoms of moves.

Ok Understood.
What is relative sentiment looking like on these pairs?
Is there a preferred time frame for market structure analysis?

The shifts you see are relative sentiment for each of these pairs.

The Sentiment Analysis Tool already takes care of that for all pairs being viewed.

In the beginning of the month or week or day (whichever reference point you choose) all bubbles are centered on the Y axis.

The X axis represents time so as time goes on from your starting point, the bubbles will shift left and right accordingly.

I prefer 1 Hour charts and Week to Date relative Sentiment.



We actually just released an excel spreadsheet on our homepage very cheap if you want to track this stuff yourself.

It has a built in Sentiment Analysis Tool but it only works for the Majors whereas the real deal also has the crosses.

But the Sentiment Analysis Spreadsheet does have a heatmap that can be used to calculate the pairs and crosses.

So with the Sentiment Analysis Spreadsheet you get:

1. Quick View of Retail Positioning
2. Heat Map of Pairs/Crosses
3. Simple Sentiment Analysis Tool like the one above that shows Buy/Sell Signal

Find out more: https://sentifx.com/sentiment-trading-excel-spreadsheet/

this is my favorite thread on the site. very informative.i have been a free member of sentifx for sometime. you used to provide a free version that you could look at us pairs one at a time, but that is now gone. i guess ill have to take the plunge and become a paying member

I meant the pink red blue and light blue indicator that shows increasing/decreasing longs/shorts . Does the spreadsheat show the same as that indicator?

@TheLegend67

Thank you for the kind words. Glad that you're getting value out of these posts.

The usage of the free version was so few people that it wasn't feasible for us to support two versions.

We want to provide the most value to our Members and anyone who purchased the Tools or Indicators so that Traders using the tools can have what they need to profit the most in the Markets.

Yes the indicator that you're speaking about with Relative Sentiment is built into the Sentiment Analysis Tool... it's just presented differently (shown as shifting left or right from the Y axis).

And since the simplified version of the Sentiment Analysis Tool is built into the Spreadsheet, yes it does track relative sentiment and extremes in positioning.

The Spreadsheet needs to be updated manually and only covers the Majors... but you can also do Basket Analysis with it.

Alright
Looking at AUDNZD now is it not to high to buy even as bubbles indicate strong buy from the pic?

I sent u mails.

There is starting to be a risk of reversal. Strong BUY/SELL zones are good for a few days.

Once the bubble shifts across the Y axis to the SELL side.... AND Market Structure breaks lower.... then you can get in SHORT at near top.

ok. I have few things pointed out in the latest mail.
Did you get the second mail on programing?

Skyf, yes Bob will get back to you with your request.

Good day Traders - Analysis for the week ahead:

https://sentifx.com/eowa-19-apr-20/

LG Filled. Did you make money?

Yesterday I posted the EoWA and the NZDUSD Long was on there with the LG fill being the most likely event to take place. Remember, trading is probabilities. We don't know what is going to happen next.

This trade was strictly a Market Structure trade and an understanding of how price moves to seek liquidity to fill LG's and take stops.

Trade Safe,

Charles

DXY took the stops above and pulled back and is still grinding its way to take out the stops above.

We were prepared for both options around the red line ___ where there was an up down direction.

But the highest probability was in the direction of DXY's build upward.....

The bottom line? Look for opportunities WITH the flow but be prepared for the unexpected.

You want your trades to align with Sentiment + Market Structure but you also need to know what wrong looks like so you can get out with the least amount of loss and pain.

EU looks like it's bottoming out here.

DXY grabbed more stops, limited upside for now.

How do you know liquidity gap without indicator?

Yes, I don't "need" indicators for the liquidity gap.

You can simply use a 1H bar chart.

Market Profile charts are great for identifying the gaps as well if you want to use an indicator.

What chart is this? Timeframe?

People in the SentiFX community - please do not respond.