Can someone explain this type of market movement? | Forex Factory

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Can someone explain this type of market movement?

  • #1
  • First Post: Jun 19, 2014 8:02am Jun 19, 2014 8:02am
Hi,

I am a relative newbie and would like to ask if someone can explain to me in fairly simple terms how this type of thing happens in the market. I have seen this sort of thing often when back testing over old charts. It is about 1hr 20 mins into New York session, 29th Oct last year on 5 min chart. I don't believe it is news related.

How can the institutions push price up like this then back down to finish below. Obviously market manipulation but how and why (stop sweeping?!).

Thanks, all answers welcome (I think)
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  • #2
  • Jun 19, 2014 9:21am Jun 19, 2014 9:21am
It's just breakout and trend following traders losing money as usual.
i.e. buy above / sell below and /or Buy top / sell bottom
  • #3
  • Jun 19, 2014 9:38am Jun 19, 2014 9:38am
it is news related,market rarely moves like this without any news.
  • #4
  • Jun 19, 2014 9:50am Jun 19, 2014 9:50am
:nerd:grin:id not happen fast enough to be considered High Frequency Trading. Looks like a typical next market session take over where one session I.e. Part of the trading world ends-begins.
Liken this to a school cafeteria as the change of different crowds coming to the feeding trough as the previous group leaves.
"Look Left Think Right"
  • #5
  • Jun 20, 2014 9:07pm Jun 20, 2014 9:07pm
Most likely you're seeing a news related movement. Usually with the news, you will see a such a sharp move and reversal. Of course, a less likely explanation would be hitting a supply zone. I read about this in an Al Brooks book. You have sellers wanting to sell only they want to sell at a higher price and so they create a bull movement prior to the selling. However, it happens much faster than what your chart depicts so news is still my guess.
  • #6
  • Jun 20, 2014 9:52pm Jun 20, 2014 9:52pm
doesn't seem that uncommon ?
  • #7
  • Jun 20, 2014 9:57pm Jun 20, 2014 9:57pm
false break
not euphoria follower
  • #8
  • Jun 20, 2014 10:32pm Jun 20, 2014 10:32pm
You should say it was the EURUSD pair and the number of pips.
The roundtrip was 50 up and 70 down.

It went up on the headline that ECBs Nowotny said that ECB has no tools to fight a stronger euro, and then went down as leveraged dollar short positions were covered for the FOMC minutes the next day, which indeed saw USD strenght.
  • #9
  • Jun 21, 2014 3:26am Jun 21, 2014 3:26am
It's called 'random shizzle' reasons are irrelevant as you don't know when, why or which direction at any point in the future. Any reasoning is futile
  • #10
  • Jun 21, 2014 4:54am Jun 21, 2014 4:54am
Quoting haggis
Hi, I am a relative newbie and would like to ask if someone can explain to me in fairly simple terms how this type of thing happens in the market. I have seen this sort of thing often when back testing over old charts. It is about 1hr 20 mins into New York session, 29th Oct last year on 5 min chart. I don't believe it is news related. How can the institutions push price up like this then back down to finish below. Obviously market manipulation but how and why (stop sweeping?!). Thanks, all answers welcome (I think) {image}
this is normal gameplay typical for all markets.
look for chf anomalities. that is real manipulation.
  • #11
  • Jun 21, 2014 5:25am Jun 21, 2014 5:25am
Nothing is random in the market.
The road to pipland is arduous and fraught with challenge.
  • #12
  • Jun 21, 2014 6:47am Jun 21, 2014 6:47am
Quoting haggis
Hi, I am a relative newbie and would like to ask if someone can explain to me in fairly simple terms how this type of thing happens in the market. I have seen this sort of thing often when back testing over old charts. It is about 1hr 20 mins into New York session, 29th Oct last year on 5 min chart. I don't believe it is news related. How can the institutions push price up like this then back down to finish below. Obviously market manipulation but how and why (stop sweeping?!). Thanks, all answers welcome (I think) {image}
buy when it goes up and sell when it goes down.
  • #13
  • Jun 21, 2014 7:15am Jun 21, 2014 7:15am
That "shakeout" could happen when price hit stronger supply or demand zone
Aggressive, High Risk, High Gain, High Accuracy
  • #14
  • Jun 21, 2014 7:50am Jun 21, 2014 7:50am
The market was slowly working it's way lower making it look like a day to trade short.
Then money / or New York open / or buyers come in and moves it sharply higher to shake out weak shorts and entice some new longs.
After the shakeout the market resumes as it were. To the downside.

Could be a news reaction.

Could be a last attempt to move higher only to hit an area of supply where many players were looking to enter short positions.

The best explanations here so far ---- there is no way to give reason for any move beyond buyers push it up and sellers push it down. It's a constant battle
  • #15
  • Jun 21, 2014 8:03am Jun 21, 2014 8:03am
Quoting Price
The market was slowly working it's way lower making it look like a day to trade short. Then money / or New York open / or buyers come in and moves it sharply higher to shake out weak shorts and entice some new longs. After the shakeout the market resumes as it were. To the downside. Could be a news reaction. Could be a last attempt to move higher only to hit an area of supply where many players were looking to enter short positions. The best explanations here so far ---- there is no way to give reason for any move beyond buyers push it up and sellers...
Price discovery.
The road to pipland is arduous and fraught with challenge.
  • #16
  • Jun 21, 2014 8:44am Jun 21, 2014 8:44am
News or not... it doesn't matter... same principles apply...

Smart money need the market to be in a bull phase(e.g. buying) before they can sell in the volume that they want.

This is classic pump and dump to crack support.

Before the surge up price, was trying to move lower... but no result... so obviously someone had been defending the lows for quite some time. So in order to draw those buyers out, whoever it is that wants the market price lower, starts to buy as well, to put the price up... once it rises above previous resistance, they get enough people to pile on the buy orders on the breakout and then they sell to them and then sell more... and more... and more.... until they absorb all the buyers volume and then some, so that the market price starts to fall... and once they get back to the support.... no one(or very few) is willing to buy any more because they did back at the high and now they are sitting as a weak holder... or already took their loss, therefore the support now breaks without a fuss.

I've seen this pattern and behavior quite often to be honest... it is not an isolated event.

Cheers -
fighter
  • #17
  • Jun 21, 2014 9:21am Jun 21, 2014 9:21am
The market phenomenon you are inquiring about can be described thus. During the early part of the session, there were more buyers than sellers. During the latter part of the open, there were more sellers than buyers. This is a phenomenon you will see many time throughout your trading career.
  • #18
  • Jun 21, 2014 10:30am Jun 21, 2014 10:30am
The political news that day was the US government spying on friendly foreign governments.

The stock market saw Apple drop.

You did not provide the currency pair for your example, so specific reasons for the move up and down cannot be provided. If the dollar is one of the currencies, then on that day the news releases were the ADP NFP Report, Core Retails Sales Report, PPI Report, and Consumer Confidence Report. None of these were stellar reports for the dollar.

The patterns you are questioning are nearly always created by fundamentals, whether a scheduled news release, or some kind of oil concern.

While stop hunting is a legitimate concern, you will find it more common during double top/bottoms and consolidations. In this case it is about triggering pending orders, not stop hunting. Sometimes, the market makers will spike the price in the wrong direction just before a news release to trigger pending orders on the wrong side. Not sure that happened here, because of so many releases, but it occasionally happens on NFP and at market opens.

Additionally the market uses pivot levels to dictate a "gentleman's" agreement on how far price will go for, or against, a currency on a given day. Obviously over time these pivot levels collapse and you get the infamous "breakout", but generally each day the levels are honored. This is necessary to prevent a country's currency from being bankrupted. It appears the upward spike must have hit the daily tolerance, so a retrace was inevitable.

This is normal trading using fundamentals to kickstart it, and technicals to control it.
You cannot be extraordinary by being normal
  • #19
  • Jun 21, 2014 11:18am Jun 21, 2014 11:18am
Nice trade.
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  • #20
  • Jun 21, 2014 12:31pm Jun 21, 2014 12:31pm
Hmm, more nice.
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