Price Action Setup – Aussie Engulfing Bar Off Role Reversal Level – Aug 14th

Sticking with the Aussie today, which I’ve been bearish on since Sunday – the pair sold off yesterday and formed a bottom off 1.0496 via an intraday pin bar setup.  But notice how the reaction off said bottom was corrective while the selling price action was impulsive?  This clued me into the fact the pullback was not heavily bought up by the institutions, and to look for a pullback setup at a good level.

Enter the 1.0533 area which I talked about on my price action commentary (last Thursday) as being a critical role reversal level.  Sure enough, the pair started strong after the London open, only to struggle at this level for the next 6hrs forming two inside bars, but ending with a very strong engulfing bar to break the stalemate.

The strong engulfing bar was a clear communication who was still in control (sellers) and that the impulsive selling should continue.  After a little fight at the 1.0496 support level, the pair finally broke it, but has since petered out.  No surprise on the lack of follow through, as the markets have been putting most to sleep lately, even those who drink 10 cups of coffee before trading, or have ADHD.

engulfing bar pin bar impulsive price action aug 14th

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Global Market Commentary:
A see saw of news today starting with Europe as the GDP numbers and ZEW came in much worse than expected, darkening the outlook as the EZ economy continues to shrink (quelle surprise) across the bloc with even the German economy slowing (no bueno) while the southern neighbors continue to borrow from the ECB at an alarming rate.  This of course will continue to force politicians and European leaders to jawbone about how they will save Europe but offer no real solutions.

On the other side of the pond, July Retail Sales surprised to the upside, but was moreso a seasonal adjustment.  Either way, nothing really moved much.  But the July surprise sales numbers meant Good is Bad because this means a further delay of any CB printing money to save the bankers prop up the economy.

Gold was the main loser dropping about $12 on the day to close just below $1600, with all the US markets trotting in place on absolutely low volume and a low VIX print while European markets gained anywhere from .5-.9% on the day.

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  • TasosK

    Thank you Chris! Very informative and bolstering analysis esp. for those who are on an Aussie ride to the South…:) BTW, would it be possible to post daily analysis on a couple of additional majors (e.g. EUR/USD, GBP/USD, NZD/USD etc.)? You see, your commentary is invaluable to newbies like myself… Cheers, Tasos

    • Glad it helped.

      I’d love to post commentary on all the majors, but it would take too long and i’m keeping my time focused on the book.

      Plus, with all the course members, I have to save time and devote a larger portion of my time and commentary/analysis to them since they pay for it 😮

      So will likely just keep it to one pair on the daily stuff, and do 4 pairs on the weekly commentary

      You can always join and get trade analysis before and after so something to consider

      Kind Regards,

      • TasosK

        Thank you for the response. Well, it seems that the only alternative left for me is to join…:). On a more serious note, having read articles of yours, watched your videos and participated your webinars, even reading your response to numerous comments left by visitors on your site I am convinced that by being a member of your community I’ll gain A LOT; and I do not refer to fx trading only…So, I’ll submit my payment for your Adv PA course in a while. Kind regards, Tasos

  • DV

    Nice one Chris,

    I played defense on AUDNZD last night and took my T1 and trailed stop to BE and got pinged out last night for a 1:1 winner – not great considering I had much bigger targets…. but that was a judgement call based on news risk

    Glad the AUD is falling though I see it just pinged 1.0469 which was my T1 hopefully she drops to 1.0350, I will be quite happy if it does…

    SP500 and Dow are also probably in trouble now too (I’m also short them) – but position trade with bigger targets) with Copper and AUD falling at least short term…

    Thanks for the updates, much appreciated