The US30 or what is commonly known as the “Dow Jones” has fired off a huge pin bar reversal on the weekly price action chart. This pin bar reversal is down at the low and sticking out and away from all other price. It also has a huge long nose that protrudes right away from the rest of the price action.
Just in the very recent times, price has been caught trading in a sideways range period on the weekly chart after it had been roaring higher for an extended period. This is a very common pattern of price action order flow that all markets go through and repeat time and time again.
Price will make a really strong trend either higher or lower, but this trend can't go on forever. The people or traders within this trend have to cash out and take their profits eventually and when they do, price will either make a quick retrace back lower or it will move into a sideways and ranging pattern.
This is why the follow up move that you see next is also very common. After price has either made a quick retrace or traded sideways, it is super common for price then to make a break and continue on back in the direction that price was originally trending in the first place. This happens because once all the profit takers have been shaken out, we are only then left with the traders making the trend and the trend will normally continue.
Looking at this pin bar, we are a long way at this stage from price breaking the high and confirming the trade setup. Since forming the pin bar at the end of the trading week, price has opened on Monday and moved straight lower to test the near term support level to where we now find price as I write this daily Forex commentary for you.
If price can hold at this support level, it will move back higher to break through the pin bar high and confirm the setup. The near term resistance would come in around the 17100.15 level, as I have marked on the daily chart below. If price continues it's move lower, then the next support comes in around the tip of the pin bar, which is a super important support level for this chart and could determine where price goes if price is to move into this level.
Keep an Eye Out! I will be releasing a new trade lesson super soon on how you can make regular money from the Forex markets. Make sure you keep an eye out for this, as I will be releasing this within the next couple of hours!
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