Saturday, October 19, 2013

Accumulation Pattern And USDCHF

I like to study and save charts of repeating patterns I observed with the belief that over time I'll get better at spotting them and anticipating a move. Here is an accumulation pattern that I've noticed many times. Again I don't know what to call it. The pattern formation goes something like this:
  1. Huge spike down - Selling climax in VSA?
  2. Price subsequently tries to make 1 or 2 more stabs down but fails to make significant lower lows. This indicates a weakening in selling pressure and often shows up as bullish divergence. The stabs down might also stop hunt previous swing lows, allowing pro money to load up longs.
  3. Price then breaks out of the pattern
Here are some chart examples:





It would be good if this pattern takes place at a HTF demand zone. It is also similar to a falling wedge pattern.

And now... I think I'm seeing something similar on USDCHF H1. It is still a small distance over a significant demand zone (blue area) so I won't be surprised if it takes another stab down into the zone first.

USDCHF H1
And here is the anti climax -  I don't know how to trade this pattern! I guess some ideas might be to trade PA bars at the 2nd or 3rd stab down (aggressive), or trade the breakout (in which case I don't know where to put the stop). 

Just something which I thought might be interesting!

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