What Support Looks Like When It Breaks
Looking at the m15 chart only can lead you to have the correct idea but in the wrong place.
By looking at high time frame charts you get a better picture of when a trend is in place, when a trend is no longer working or when there is no trend and we're in a range.
On the attached charts a daily time frame (top left) has a defined up trend and at 1.6700 the trend line and price meet for the 3rd time of Sept 27th. Here traders wanting to keep adding to long trade would initiate a long trade.
However by the close of the daily candle that idea is no longer valid, as the trend line did not hold as support.
Moving down through the smaller time frames we see that the days leading up to the 27th September have been consolidated into small daily moves. There is a clear line of support under these days that is clearly broken on the H1 chart etc. This equates to the time when the Daily candle approaches the rising trend line.
What we see happen next is that the broken daily horizontal support is now acting as horizontal resistance and price is trapped between this new horizontal resistance and the rising daily up trend.
When the horizontal resistance holds and the daily rising trend line are broke on the H1 candles traders waited for a quick retest and then went short. Accelerating the move.
By looking at high time frame charts you get a better picture of when a trend is in place, when a trend is no longer working or when there is no trend and we're in a range.
On the attached charts a daily time frame (top left) has a defined up trend and at 1.6700 the trend line and price meet for the 3rd time of Sept 27th. Here traders wanting to keep adding to long trade would initiate a long trade.
However by the close of the daily candle that idea is no longer valid, as the trend line did not hold as support.
Moving down through the smaller time frames we see that the days leading up to the 27th September have been consolidated into small daily moves. There is a clear line of support under these days that is clearly broken on the H1 chart etc. This equates to the time when the Daily candle approaches the rising trend line.
What we see happen next is that the broken daily horizontal support is now acting as horizontal resistance and price is trapped between this new horizontal resistance and the rising daily up trend.
When the horizontal resistance holds and the daily rising trend line are broke on the H1 candles traders waited for a quick retest and then went short. Accelerating the move.
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