macplauz's  Instablog

Price manipulation in the Forex market - Euro/US Dollar

A very important aspect in (Day-) Trading Forex in my opinion is that price is most often pushed/ manipulated (particular at news release) to slightly penetrate or break Support/Resistance zones (for example recent Highs/Lows/Pivot Points or in general where stops are anticipated) to trigger the stops and often reversing after completing the stop run and targeting the opposite zone where stops are anticipated (for example the stops of the fooled breakout traders). The manipulation aims to catch the stops and to fool breakout traders at Support and Resistance or striking levels for example highs/lows and psychological numbers. This allows market manipulators to position themselves against the mainstream trader (setup). This may explain why most of the traders and mainstream trading strategies fail and will fail in the future.

Thus, an efficient way to successfully trade forex might be to accept and understand the way of market manipulation. Hence, it becomes important to analyze the intention of the manipulator, which is to catch stops of the mainstream traders and to fool them into bad mainstream setups by moving the market in the opposite direction targeting the mainstream stop zone e.g. at popular Support/ Resistance. Mainstream setups only work out when they are related to the manipulator's strategy. So it often falls back to the manipulator's trading strategy but if the mainstream trading strategy will work out, which probably is statistically insignificant , then this often reinforces the hype about the mainstream trading strategies, which are mostly fooling traders into bad setups and give manipulators the advantage to know how most of the traders trade, including the location of their stop/limit order positions.

Furthermore, there are many algorithmic trading programs of the market manipulators, which are automatically employed on the short term time frames like 1 min, 5 min,hourly..., programmed to use their market power to move market against the mainstream traders to shift the odds of successfully trading forex heavily against them.

In general, I would argue that stop running on at least the shorter time frames should be accepted by traders and that it should play an important part in a traders day and swing trading strategy to successfully trade forex. A wise alternative would be to stay away from forex.

More about forex manipulation at:

http://forex-chartanalysis.blogspot.com/p/price-manipulation-in-forex-market-is.html

More information at: http://forex-chartanalysis.blogspot.com/

Read Chart pattern explanation, Chart patterns explained, Chart pattern analysis and Candlestick Chart patterns for more information.

http://forex-chartanalysis.blogspot.com

The EUR/USD had a quite session today and so far the Euro traded in the hourly consolidation range around the low of November 8th.

The European session started with a shakeout/ stop fishing at 6 a.m. GMT. This false breakout led to a reversal of the EUR/USD. Market moved down to the 1.27 level and in the following market price action was capped in the range of this impulsive move during today's trading session.

At 1.10 p.m., the EUR/USD reversed at the 1.2735 level because of the Fibonacci cluster due to the two 100 % fib extensions from the previous swings up, the daily pivot point and the recent high at 1.2730 on the 5 min chart.

We had many continuation patterns (green circles-Pennants,Flags,Ledges), which could have guided today's trading decisions. Furthermore, the red circles show where the Breakout Timing strategy could have been applied and the orange arrows show where consolidation price zones led a market reaction. The Fibonacci levels also helped to find turning points.

Read the pages: Chart pattern explanation, Chart patterns explained, Chart pattern analysis and Candlestick Chart patterns on this site to get more information about the underlying Chart and Trading patterns/Signals/Strategies