Sometime later i'll give a little order flow 101 if anybody is interested.
Hi,
happy holidays for U.S. citizens
I would like to view back at yesterday's break which is what i would like to take as the basis and look what happened in an order flow perspective.
First, we must analyze the situation technically...and by technically i mean look at what price has done...forget indicators, just price..You'll notice that there's a good chunk of support at around 1.3430...You'll also notice it's downtrend and lower lows on an hourly chart. All of that indicates that the buyers of those lows or at those levels are hugely exposed and most of their stops are placed under the break. Now, the beauty of tech analysts are that they take all things to be equal and that charts tells the whole story...which is BS.
So, they go long in the support thinking that since it has hold so many times it only gets stronger...it actually get's weaker.
Here's a great example of classical tech analyst mindset:
Because there is key support at the bottom of the base is precisely why this is a low risk bet. My stop loss is below the base at 1.3390.
You'll also notice that his stop is where everyone elses stops are -below the support. Giving market makers even more incentive to push into them.
Now all of that would be fine if you had bullish sentiment or some new positive information. Then there might not have the power to push into those bids at support.
That is why daily sentiment drivers are important. Yestarday, we had lower equities, higher bond yields and that german auction was really a cherry topping.
just an FYI, when it comes to tech analysis i try to keep it as simple as possible (see the chart)...no need to overcomplicate the visuality. The whole idea is to see and predict the order flow from a chart. You can only do that successfully if you pay attention to the most common patterns. That's it.
Now, looking forward, you know that there will be sell orders at the previous support turned to resistance. A lot will try to sell into the 1.3430 handle...so, i'm intrested in what's going to happen ahead of it. That's a key level and purely technically speaking if there isn't enough strenght in the selling then price might run for the weak sellers spiking back up to the previous range...but that's just air talk...will have to wait and see how price behaves.
cheers.
