End of Summer Trading Price Action Replay

The markets have been a hell hole for traders over the Summer period – it’s been a bad season. Usually “Summer Trading” is the time when most of the big players take time off, and their liquidity goes with them.

Summer, in the northern hemisphere, is known for the choppy market conditions, and very slow price follow through.

Not to help matters, the fed announced a possible rate hike in September, which put the market into further pause. Thankfully the fed has finally played their card and announced they will hold off on any rate hike at the moment, reviewing the decision if US job numbers increase.

Hopefully, this will set the stage for future market direction for the next few months, and give us traders something to work with.

In today’s replay post, I would just to look back over a few price action events that we’ve covered here on the front blog, or discussed in the War room recently.

EURUSD Double Inside Day Breakout

Price consolidated here mid range, creating a double inside day consolidation pattern – a powerful breakout catalyst that can cause violent price explosions.

The setup formed in the middle of a weekly range structure and had the potential to break in any direction, but because of the slow Summer trading period, we weren’t expecting any huge moves.

Price ended up breaking out to the high side and following through with bullish price action for the next couple of weeks.

The market has now reached resistance here, which did produce a heavy bearish response. We will most likely see continued bearish price action from this bearish reaction off resistance, so now would be a good time to consider taking profit.

USDSGD Bearish Close on Negative Side of Trend Mean Value

If you’re not watching the USDSGD, I suggest you switch it on. It produces some very good price action and some nice trends.

Notice how previously, the market was respecting the mean value as dynamic support as price remained buoyant with the bullish trend.

We can see now the market is closing on the bearish side of the mean value. This is a very bearish price action event and could kick off a new bearish trend.

The market did drop fairly heavily after price started trading on the bearish side of the mean.

Our plan was to sell any bearish signals that formed after retracements, instead the market just dropped hard down into a major support level.

Now we’ve got two strong bullish rejection candles off this major level. Looks like this bearish move was just a correction and the market wants to pick back up start moving with the dominant bullish trend again.

These bullish rejection candles are a perfect swing trade, which we can use as a frame work to build our long positions from. This is definitely one I am looking to get into next week, targeting the retracement entry.

AUDNZD Bearish Rejection Range Sell Trade

A pretty straight forward setup here on the AUDNZD cross pair.

Price cycled through it’s range structure and dropped a thick bodied bearish rejection candle off the range resistance.

If the setup played out, we could see a move down to the range bottom as the ranging market goes through another cycle.

Unfortunately, this trade idea was wiped out by a failed breakout above the range resistance.

This is the risk you have to take sometimes when you deal with ranging markets – the market can get volatile around the range boundary, and trigger your stop this way.

Despite being stopped out, the sell trade idea still stands. The market tried to breakout of the range resistance, but failed. The failure wiped out any bullish presence in the market here and gave the bears less resistance to drive prices lower.

We seen Friday’s candle did product a large sell off and is setting the stage for a move down to the range support. It’s just a shame that the stop was triggered before the move took place. This is the nature of Forex and you just have to learn to deal with these kinds of kicks in the teeth.

AUDJPY Breakout Trap & Reverse

This was a trade setup that I entered this month. It was a counter trend position, but I thought it was worth the risk.

The market had already sold off aggressively and we had not seen much in terms of a correction as of yet.

My Price Action Battle Station indicator alerted me to a pending bullish breakout trap & reverse setup on the AUDJPY, so I set up my buy stop.

I liked this trade because the market showed aggressive rejection of an Asia session bearish breakout, then started to show a lot of bullish strength building up after London open.

If this market was going to make a correction move, this was most likely it.

The trade did trigger and take off to the high side as expected, however the momentum was very slow and the trade was slow to progress

Usually these breakout trap setups really fire up and produce rapid returns, but in this case the market was lifeless – to be expected this time of year.

A bearish rejection candle signal formed, which is actually a sell signal. So, I used to the sell signal as an exit signal to my own buy trade.

I took the 50% retrace of the bearish rejection candle as an exit price, so I could squeeze what I could out of the trade.

Unfortunately, this was not one of those glorious 1:6 trades that I would have loved to have showed off – the market just hasn’t been giving up the goods the last few months.

Just trying to remain patient and waiting for the market to fire up with life again.

AUDUSD Breakout Trap & Reverse

A very similar situation occurred on the AUDUSD market.

A bearish breakout occurred during the Asia trading session on the AUDUSD, and was rejected when the London market opened.

This is a pattern that occurs time and time again, and can get you into very strong price moves.

There was much better follow through with this bullish breakout trap & reverse setup, as you can see price rallied out of the setup into a major weekly level.

Again, the trade idea is terminated by opposing signals, in this case two bearish rejection candles pushing off a major level. This is a strong sell signal, and we will most likely see lower prices develop out of this setup next week.

If you’re long here, then you might want to consider taking profits.

War Room Update

During the Summer trading period, when things were quiet – I decided to devote some time to some projects I wanted to complete.

The Price Action Battle Station

This is a plugin designed for MT4, which is designed to identify candlestick patterns and breakout traps that we use in our everyday trading.

The best part of this tool is the alert system.

No need to sit and watch the charts – This software can send alerts to your smart phone and even send you emails.

If you like to trade the H4 or H1 charts, this tool will be very useful for you. Set it up on all your favorite pairs and be notified when a potential intra day setup forms.

The War Room Offline Chart Generator

This tool is still under development, but very close to completion.

MT4 is very restrictive with the way you can view your candlesticks, it locks you into certain time frames and doesn’t allow for different candle close times.

There are other plugins out these which will generate custom charts for you, but they are very message and resource intensive.

My chart generator can make “live” custom time frames, with custom candle times charts – all from the one location. The tool can also generate Renko candlestick charts.

This truly is going to be a great tool for the price action trader, but we need to iron out a few bugs as this is really pushing the boundaries of MT4.

Be sure to give me comments below, and let me know if this tool is something you would be interested in.

Wrapping Things Up

Now summer trading is over, and the fed have played their cards, hopefully things will be back to normal.

We’ve got a few good price action setups to work with going into next week’s trading, hopefully they turn out to be huge trades 🙂

If you would like to learn more about price action, swing trading, or gain access to the tools that I mentioned above – please check out our War Room Membership for Traders.

All of our trading course, war room commentary and MT4 tools are covered under the one single war room lifetime membership. So if you decide to join up, you will have access to everything in there, forever.

That’s it from me, best of luck with your trading this week.