EURUSD 31Jan2023

[Peter Tree]

Hi,

Please have a look at the image.
I’m I correct to think that the yellow box in H4 is represented in the orange box on H1?
And to then also say that there are abnormally many dumb money longies in the markets according to the H4?
One can expect so many long positions to create somewhat of a buffer for price not to go higher easily?

Any comments and perspectives are appreciated thanks!

Kind regards,
Peter

[Peter Tree]

Just a follow up, the picture changed completely overnight without any real SLs taken or large price movements. See attachment.
Was the data from yesterday (previous post) correct?

[Geza Kovacs]

Hi,

See the latest EURUSD video on youtube: https://www.youtube.com/watch?v=_7NuMQbs_bI

[Admin SME]

[Peter Tree]

Thank you for the video!
Still curious, why did “longies leave so quickly”? It was literally within hours overnight, without real data, news or SLs..?
I was doubting if the data was correct on 31 Jan. Please see the first image I posted. Those massive long positions should have been a price barrier?
But then they just suddenly dissapeared.

[FractalFreak]

Hi Peter, the answer is in the screenshot attached:

And that is a good example to explain DM tolerance.

So no, these DM longies really were in the market, and yes, they even closed with a small profit or breakeven. But here is the thing; despite the longies “looking big”, they were within the DM tolerance. Because, we were in a squeeze against the DM shorties.
When the SM took the upper STS of the shorties, the longies, rather than being “sticky”, left pretty quickly and used that chance.
Now, note that this does not happen often, but it can now and then.
Look at the encircled area of the squeeze indicator; the longies were close to switch the market to the other side, but they just did not make the cutoff.
When most starting leaving while new DM shorties entered, the squeeze continued and expanded.
Yes, the “POWER OF THE SQUEEZE” as I call it. 😉

However, if the scenario would have been different, I may have placed a BIG trade when the market did the pullback up and offered a cheap entry. All I would have needed for example would have been the red squeeze line to DROP,
so some shorties getting out. In that case, I would have placed a bigger short at the pullback, also because of the “lasso principle” energy, so the willingness of the SM to quickly tie in the longies again.
But that did not happen, instead the opposite;
despite the squeeze lines “kissed”, the squeeze against the shorties continued in full swing and even expanded, sealing the deal for a stop-run up.

Very interesting case; it was VERY close to a nice switch in the overall market (which would have given a HIGH BIAS trade), however, instead, the longies were JUST within the DM tolerance and quickly left when the pullback appeared.

😉

D

[FractalFreak]

This is a really good case to understand these principles.
It is like a “squeeze divergence”.

However, sometimes one can enter a little early, trying to get a “real good seat” in a potential big move, but one then needs to have the willingness to throw away the trade of course.

😉

D

[Peter Tree]

Thank you!
Great example and teaching.

[FractalFreak]

Thank you, Peter.

D

[aj1985]

hey, very nice explanation, I am a new subscriber, can any of u be so kind to indicate me where/how to get the indicatior added to my charts? I looked everywhere in the forum but really cant find an setup instruction post or video and I am sure there is one. Thx a lot !!

[Admin SME]

Hi AJ,

all the shots you see there were taken from the MK web.

SME FX

[Author]

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