$GBPUSD - Fill the Void
Just like my cold dark heart, the markets seek to fill a void created by an imbalance of supply and demand. When there is a sharp move in either direction, an imbalance of buyers and sellers is created. Every trade has an opposing order that, at some point, will be executed either by choice, for profit-taking and risk management, or by force, as a function of liquidation. The opposing orders often act as fuel to the fire as it propels the move forward further and faster. As the market extends further, more and more late traders are lured in. Unbeknownst to them, they are quietly being set up as liquidity providers as profit-taking and a new accumulation and distribution process unfolds. It’s this process that restores balance and order in chaos (to the Force).
Currently, the cable has retraced 50% of the previous drop. This also lines up with previous support, potentially turning into resistance. I’m sure traders will try and short here but I don’t see a compelling reason (setup) to do so ahead of NFP. Especially, since there are more shorts to flip to the buy side from the widespread 4hr “bearish” candle that closed on the low. I put bearish in quotes to help identify which candle I’m referring to. The 03/04/2023 “bearish” daily candle also illustrates this concept of Strength vs Weakness and what makes a bullish or bearish candle. It’s the opposite of what most people think. The right context and market conditions need to be present.
It wouldn’t take much for the cable to retrace back to the 1.2 area or even make a full correction back to the top of the range. With NFP around the corner, I want to see how this plays out. I prefer playing at the edge of chaos instead of in the middle before a big event as anything can happen.
Plan. Execute. Next.
Trade Less. Make More.
Currently, the cable has retraced 50% of the previous drop. This also lines up with previous support, potentially turning into resistance. I’m sure traders will try and short here but I don’t see a compelling reason (setup) to do so ahead of NFP. Especially, since there are more shorts to flip to the buy side from the widespread 4hr “bearish” candle that closed on the low. I put bearish in quotes to help identify which candle I’m referring to. The 03/04/2023 “bearish” daily candle also illustrates this concept of Strength vs Weakness and what makes a bullish or bearish candle. It’s the opposite of what most people think. The right context and market conditions need to be present.
It wouldn’t take much for the cable to retrace back to the 1.2 area or even make a full correction back to the top of the range. With NFP around the corner, I want to see how this plays out. I prefer playing at the edge of chaos instead of in the middle before a big event as anything can happen.
Plan. Execute. Next.
Trade Less. Make More.
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