Many traders got confused by the whipsaw price action today on gold.
It’s very easy for volatile price action to mess with a trader’s psychology, but from a supply and demand point of view, it was really quite simple to read.
There were 3 major supply zones on the 15 min chart that were all followed by a very fast move away from the zones. This indicates that there is institutional selling pressure at these levels and when price returns we may expect further orders to be filled.
What makes the middle supply zone very special? Well, it had the power to break a major support and resistance area which was also a place that price had used as a “pivot” on the daily chart (or a High Volume Node, as Market Profile freaks prefer to call it).
Let’s look at that pivot area on the daily chart. The daily shows that the area that was broken was of huge importance and lends even more credence to the supply zone on the 15 min. Price pivoted on both sides of the zone, but it was the 15 min chart that gave an accurate entry.
It’s easy to get confused and chopped up in the heat of the action, but with a few simple rules you can keep your psychology on the “straight and narrow”.
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