#forextraininggroup

The two small blue arrows on the chart show the creation of the first two tops in the supply zone. We will look for Short trades that interact with that level.

The USD/JPY could be sold after the bounce as shown with the first green arrow on the chart. The price starts decreasing afterwards. Soon after, a swing low is created and we see a sharp price move to the upside. This area subsequently forms a solid demand zone on the chart.

The price returns to the supply zone for a re-test afterwards. See that the USD/JPY bounces sharply in the bearish direction. This creates another short opportunity on the chart. The pair could be sold again after the bounce from the level. After the price decreases, it reaches the magenta demand level on the chart, creating another bounce. The second short trade could be closed when you recognize the bounce from the magenta demand line.

The price returns to the supply zone and bounces again downwards. This leads to a new price decrease. However, this time the price action creates a strong market gap down and almost goes through the already established demand zone, meaning that the bearish force is stronger than usual. In this case you would have had a sufficient reason to hold the trade on the assumption that the selling pressure has taken over, and the pair is entering a bearish trend.

We use the big bearish yellow trend line to measure the intensity of the downwards move. Then we hold the trade until the price action breaks the yellow bearish trend line. The last red arrow shows the moment when price breaks thru the trend line to the upside, which would be a valid signal that the trade needs to be closed.

At the bottom left corner we see a supply and demand zone. The demand zone is marked with blue and the supply zone is indicated with magenta. See that the price action creates the demand zone after a previous decrease. The price bounces several times from the demand zone, and we would have had several opportunities to enter the trade.

We assume that the demand zone will trigger new long orders, which will push the price upwards. The stop loss order should be placed below the demand zone as shown on the image.

Notice as the price increases from the demand zone, that it eventually reaches the nearest supply zone above. However, the price action breaks the level with high momentum cluing us in that the level is not strong, and that the GBP/USD might extend its bullish run. For this reason the trade could be held on the assumption that the increase will continue.

This is exactly what happens. The price initiates a new rally. On the way up we see increasing tops and increasing bottoms, which confirms that the GBP/USD is in a strong bullish trend. The increase continues for 1 week. A bearish attitude is demonstrated afterwards.