Traders in a stage of the cycle of market which is one of the most frustrating to deal with, and where more money be wasted trying to find out things. This stage is when we are going through a phase of consolidation, lateral movement consolidate recent made movements, while anticipating a continuation of the previous trend. Consolidation can be extended up to the moment and therefore time, which really naturally results in distribution, (where the active begins to be sold as the realization that has expired the original trend), when there is no more forward momentum. Add in low volume levels, because we now have, and volatility begins to decrease slightly. As market participants comfortable with the status quo.
Volume: When used as a tool of confirmation that the chosen price monitored by other volume is invaluable. But as a count exact, as traders are accustomed to in equity, is like comparing apples and pears; they look good, so much work, taste different, but both have a benefit in use. The volume that we see in the spot forex market reflects very well the real, accounting, volume seen in foreign exchange futures trading. On a day of participation (volume) market higher are more likely to strike at their destination in time compared to a below average volume day.
Consolidation: Protects the current point of prices; not wanting to go up or down. Phases of consolidation generally occur in light volume.
Distribution: Liquidation of positions being held, but he did not want to reveal that he is doing at the same time preparing for a move in the opposite direction. Phases of the distribution are generally heavy, erratic volume peaks as the raw material or asset is liquidated and purchased in small quantities for the distribution group; they have to buy some back to stop the distribution of converting into a sale outside before they end up distributing.
Distribution: A lateral pattern of trade which is caused by the distribution or sale of an asset rather than a reversal of the recent move to happen seems to be happening in the major pairs. They have finished the momentum, and the consolidation phase has now become an investment of distribution; a pivot point.
For experienced market participants, the distribution phase is known for creating the most afraid of market or volatility and is so you can feed a merchant experimented with a plan. There is no real way to confirm the change of consolidation on distribution until it is just that, and at that time the herd mentally tends to over-exaggerate the later movements.
Enter the phase of distribution with a trade has to be well planned, have larger goals and a more flexible thinking process. The herd still has the upside-down as it is the case the phase of distribution, are grazing in the previous trend, happily aware that change occurs in the lists of four hours. Once the market players have distributed their celebration of the previous trend and have been going on than others, is time to inform the herd that things have changed and in his head out of the depresióny to obtain a course of Stampede.
A holder of screaming always is good for something along the lines of; "The strength of the dollar before NFP misery, buy dollars!" Headlines, designed to awaken to the herd, tend to reverse the latest headlines that were there to conceal its efforts to distribute their stock. Yesterday, was "more misery for the dollar as recession looms!".
Volume, consolidation, distribution, headlines; the pattern is, has been for decades and still always seems to work. Are already in the players, have worked in the market of mechanics, have been linked to movements in the Treasury, oil, gold, and futures markets, they have used the commercial experience to know how the volume, consolidation and distribution and are waiting for one thing; the flock to realize that going in the wrong direction.
Are you ready for the holders of the screams? We have already seen the jawboning of political responsibility and central banks. All what we need now is to ensure that players have had their fill and start to push the buttons that will get the herd moving.
Consolidation? Absolutely, we had ten days of consolidation of forex.
Distribution? It seems that the way of Asian trading patterns have developed that distribution has taken place; We have seen sporadic volume and some strange movements, inappropriate.
Volume? There is nothing firm on the levels of market share recently, and that is the perfect foil to do an important job.
Holders? Ah yes, more than enough to begin to realize that someone wants the flock to move.
Daily graphic detail: Take a look; all elders have been consolidated so that are all occupies an area of graphic SMA every day or another. The jumps in these areas in the increase in volume and headlines will be key to be in the next phase of trend. Comes, all we are looking for is a form of volume spike above the norm in a daily closing. Signal the coup of Fund which is the phase of consolidation and distribution a period follows trend of the trade.
Written by the team of trade TheLFB, © 2007-2008 LFB services, LLC. All rights reserved. http://www.TheLFB-Forex.com
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