Market Update 28/05/2021, Continuation and Reversal Patterns
Hello traders and welcome to the market update for the week ending 28th of May 2021 I’m Jay G member of the Vedanta elite trading team here in most of the markets, and today I’m going to talk to you about continuation and reversal patterns. So as we know the markets always moving phases. So as you can see from the chart that I have open here already, you’ve got all these swing highs and swing lows, and they’re determined, they just, you know, that the market has turned at that point, okay so that’s you’ve got a swing low and it’s followed by swing high, and then a bit of a move and then the swing low and continues, so forth. Okay, and this is the phases, okay you all have a down face-up face or not we do call them to phase one or phase two, depending on which way the market is trending. As you can see here it’s saying it’s an uptrend, so that’s an up-trending market, but that will be further down the line, from where it is at the moment, just for reference purposes I wanted to show you that we have a smart money indicator, which is exclusive to Master the Markets and it’s quantifying our swing lows and swing highs for us. Okay, so a lot of the work has already been done for us. However, what we’re looking for here is to establish know which way is the market moving. Okay, the probabilities are, you know, it’s got possibilities of going sideways could go up could go down. So what we need to look for is which way is it looking to go, and how can we capitalize on that by placing our trades. Okay. One way to do it is by looking at the chart and seeing what is the market doing, as in, which way are the bars forming, are they forming to the upside. The downside, the size of the bars and seeing how big they are. Is there a continuous run of seller bars? Seller bars being the red bars that are going to the downside. So as you can see here there’s a move that you’ve got to set a ball there and another one there for about another one so it’s a strong move to the downside. Okay, and that tells us that this market is definitely going down, we can kind of capitalize on that and say you know what we will continue following down but we also need to look at to see how much of the open equities left. So there are various things that we need to look out for. As we look at the charts. The way to find out if it is continuing a continuation pattern or reversal is what we do is we tend to draw some lines on the chart. So, let me just move the chart for you in the direction here. So as you can see the chart forms a on a daily basis new bar forming. And what I’ve done here is I’ve drawn some lines. Okay, so these lines that you see here are support and resistance lines. So as you can see the button at the bottom is a support line. Okay, why is it called a support line, because this one is like the floor, when you say the floor, you know the floor holds your weight, then you’re supported by the floor and you’re not going to fall through. However, if the floor gives way, then you are going down, and you’re going to get onto another level which is going to be the level below wherever you’re standing, standing so this is a support line there. And the top one here is a resistance line. Okay. Resistance is when you try and jump up and you got to the ceiling so there’s only a certain amount that you can jump to, you can’t go any further than what the ceiling would allow. However, if you do break through the ceiling, then you end up on another level, so that’s what we’re looking for those support and resistance lines here. We’ll wait for the touches to come down, the market is gonna move this support line a little bit further but you can see that it comes down to the support line, and then retraces back up to a resistance line then comes back down to the support line back up to the resistance line, and so forth the market keeps on moving. So when we get a channel like this, spoke to you about this previously where we got these trend lines to say, you know, we’re getting a bit of a channel, forming or a bit of consolidation going on in the market is compressing. So what happens is, when we get something like this, we’re waiting for the market either break through one of these lines, and that gives us an idea of which direction the market is moving in. Okay. So, when we go into that. We, as we move further along. As you can see, there you are, we have this resistance line that has been broken. And then, as you can see from here that once this broken resistance line.
It heads up to the high side, and we can see this is an up-moving trend. So we know that this is from this point onwards, has become a continuation pattern, and carried on. Okay, so if you’re looking at this one from the bottom here. Walking looking for seeing the market here okay it’s turned we’ve got smart money to go come up on the confirmation dot here. So now we know the market is going up, okay, how far does it go, it gets to a certain point and then you can see these are buyer bias to the upside and then we’ve got a seller bought them to the downside, and it’s a sizable salad bar, you can see the length of that, and how big it is. And then we sink. Is this going to be a turning point, this is what we call a primary bar setup three-bar primary bar setup, okay in a lower high and a lower low. So, is that another turning point, is it the turning point so we would look at an opportunity on here, and some of this using some of our strategies, and as you can see yes it has reversed, and it’s coming back down to the downside there, but you can see that the size of the moves is pretty much similar there. They’re not breaking past any of our lines of support and resistance. Okay, so there you can see that happened and then here, again, you know we’ve had some salad bars there. There’s a slight interruption there and then you’ve got a big salad bar to the downside. And then you’ve got a buyer bar formed there feeling okay, You know which way is this market going. As you can see the smart money indicator has kicked in, and given us a confirmation to say that is a swing low, and then we just want to see how far it’s going to go, and when he gets to this point there you can see it’s broken past our resistance line, and taken trade to the upside. So if we had entered on the confirmation bar would have been an entry on the close of the confirmation bar there, our stop loss would have been on the low the stop by there, and then we would have just trailed this along as we go all the way to the top, and take them good run on this trade. Okay. So that’s the continuation contract continuation pattern there, but sometimes you’ll get a reversal as well so there you can see that it’s a continuation. And then when he gets to a certain point. Again, swing high confirm, and then the market is going back down. However, we didn’t add a price, there was no primary bought setup day inside a bar forming there. We’re looking for an inside bar breakout, we could have taken that on a trade to the downside, but we need to make sure that the market does form for what we’re looking at. This can take quite a while to float to form, it doesn’t form. When we require it to form the market forms when it’s ready to form, and therefore we have to make sure that we stay patient and maintain our, our plans to take a trade only, and when it occurs. We also use other, you can also use other tools and indicators to confirm if it’s happening. So basically you could do some timeframe correlation to look at the higher timeframes to see which way the markets are trending. And, is there more support, or strength for it to go in one direction or the other. But here, as you can see that now the markets, ending their choice, okay at the moment, there’s a couple of lines there. This market could continue going, and a panel there, a little bit of compression. It has an option to go to the high side, which is showing support for at the moment as you can see there are three buyer bars there or to the high side going higher and higher. So, there’s a strong, strong possibility for it to be going up there’s more probability on the upside on there. But there’s also an option for it to go to the downside. Should there be a lack of faith in the market and he doesn’t get the support to the upside, then the market will turn and come back to the downside. As you can see here we have a strong buyer but they’re quite long, to the US. And then you get to a point and then all of a sudden, the smaller seller buyers come in and take it back down to, into the range of the consolidation within the confines of the arrows there. Okay, so this is what we’re looking for. Which way is the market going up, down, sideways, and then from there, we wait to see where it makes a breakthrough. Like here, at this point when you made the breakthrough there. From our resistance line, and then took a move to the upside there. Okay, so either, it’s going to be a continuation, like so. Or, it’s going to get to a certain point, and then we’ll get a reversal, forming. And we take our trades, according to which way the markets moving on a guess, of a probability of. Which arrow. It’s gonna follow in the markets. Okay, that’s continuation and reversal. Now when we’re looking at this, we’re also looking for the open equity as well to see, you know, has he gone to a certain point and you know do we carry on taking a trade on a continuation, if we got to a certain point, we’d say that note from there to there quite a bit of open equity has been diminished therefore doesn’t make sense to take the trade to the downside or wait for a reversal to form, and then look at opportunities to take the trade to the long side. Okay, so there are many factors that look that come into it, but a little bit of understanding on continuation and reversal. So our strategies will take this into account. As you can see we have a caching strategy which is a reversal strategy, and that works quite well with us, in conjunction with the smart money indicator. Okay, clear that for you now and move on to analysis for the markets have marked review for this week. Let’s see what’s happening on the Euro USD. Euro USD.
As you can see, with a little bit of support to the downside. It’s had quite a bit of a run for the past few weeks, going up to the upside and now we’re losing a little bit of strength there to the upside and it’s making a move towards downside on the Euro USD dollar Swiss Swiss a little bit of slow movement there is a turn. So today, you can see the markets gone to the upside. Long move to the downside. So as I was talking about open equity would we take a trade to the downside? Quite a bit of movement has been made, we wouldn’t be making a trade for the downside from here onwards, But we’ve had a swing low confirmed swing low, and then a swing high confirmed so now we have a confirmed high. Therefore, we could have possibly looked for a move to the downside. From this point, but here is now moving to the upside again. So imminently get a swing low confirmed, and then we can possibly take the trade to the upside, which is where the market seems to be moving on the dollar Swiss, pound, pound dollar flat consolidation trending upwards, there. And now, As you can see this week. It’s just confined within these two lines there. So what we’ll do is we’ll wait for it either to break through to the upside or to the downside and then take a trade, according to which line it breaks. And I will cap, catch in with some open equity on the dollar-yen. Organic as I said, a bit of consolidation going on, but it has broken through the high previous high, so you’ve got a previous swing high there and the market has broken through that so there’s a strong move to the upside. And as you can see on the trend it’s well it told you that it’s an uptrend. So there’s a strong move to the upside. This will be a good time to get into the bullish entry, which, if you follow the live trading rooms and the elite rooms, Then you will see that we have taken a trade on the dollar-yen to the upside there. So, congratulations to those that are in that trade was it done a little bit of a sideways move on there. It has been for a while, so nothing further on there as swing low come down here, and as you can see today’s swing lot has broken through the downside. Does it have more strength to go to the downside, support, there’s a swing confirmation as well? So, there may be more move to the downside on the Aussie dollar JPY. Still, slow and steady move to the upside and it’s still moving to the upside, with a strong buyer bar there. Today our market is turned. Keep an eye on it but as you can see it is generally to the upside. On the footsie. We’ll see we’re waiting for a swing high to confirm before we can take anything on there but we’ve got two points on the chart here, a low point there and a high point there so until one of these is broken, then it could be difficult to dictate which way the direction is going to be, but it is a slow steady move to the upside. The footsie. I’ve mentioned before, the footsie and the Dow Jones, similar patterns. So there you go on the Dow Jones as well. It’s got a steady move to the upside. And even today, because more cinnabar, but you are and it’s changing as we speak. But, yeah, a move possible move to the upside on here. Coffee has also made a steady move to the upside. Today, he’s got some strong support in the buy. So, therefore, you can see that the move is quite clear on this chart that is going to the upside. We’ve got higher lows and higher highs forming. So they go for upside on the coffee oil. We have had a few trades on oil. This week we actually have one running live now to the upside. And as you can see, it’s showing support to the upside there, possibly some more move to go. Still haven’t taken out the previous swing high. So, good chance that this is going to continue to the upside and give us a little bit more profit today stop loss or move to a point whereby will be past our break even. When we move this stop loss on there at the weekend, gold, slow steady move to the upside on gold, there’s a bit of buying pressure coming in here, so it’s still moving to the upside Captain see the bar, the bar is still moving. This tested it, to see the downside but nothing further, and it’s gone back up some more movement to the upside expected on a gold Bitcoin. Yep, it’s had its good run. As you can see here, the previous loss. Not last night but the one before that, the high was 64,800, so it’s close to 69,000 at its highest point of any time. And since then, you know, with the news and markets, and some announcements. Of course, the last little bit of faith in Bitcoin and Bitcoin has come down to a bit more of a manageable figure there. So, slight consolidation this week. Bit of a sideways movement, but a big bar there so we’ll see you know whether it’s taken out the height of this bar before there are opportunities on Bitcoin coming into the market. Okay. And that’s it for the market update, or the charts or do now is give you an idea of what’s occurring in our, our two rooms.
So Market updates our two rooms first one elite room. So the primary one is strategy 20% Or we had nothing. This week on the caching 4.0 20% Or he there was nothing on there is this week, the caching 4.7% was nothing, or not trying to take an up-close this week on the caching 4.0 100 pips, which is a trade that we place our target for 100 pips from entry. We had one trade, which closed us out the minus naught point naught seven so very small loss on that trade their continuation patterns were nothing on condition about quick exits on the slow exit continuation factor and we did have a trade running, which gave us a minus naught point eight 0% loss for the total for the elite room was a minus naught point eight 7% to the downside. And in the live trading room this week, prime riders we had nothing left off, 70% and 20% We had no trades, taken this week on the caching 4.0 TSR primary, we had a minus naught point three 2% loss, and on the caching 4.01 Day exit. We don’t know. No credit closed out. Even though we do have a trade running at the moment. So nothing close down there’s 0% on there so that’s a total of minus naught point three 2% on the live trading room. And that brings us across both rooms, the elite room at minus naught point eight seven and live trading room at minus naught point three 2%, giving us a total of minus 1.19% loss to the downside. Okay. And that concludes the live market update for this week. It just leaves me to say. Until next time, stay disciplined, follow the plan, and keep trading like a master.