Here is an hourly chart of EUR/USD over the last week. As we can see lots of volatility this being due to fundamental data changing on an almost daily basis.
The chart should be fairly self explanatory. 2 big control bars CB1 and CB2 controlled the action at the start of the week. Notice the close of CB2 around 1.4200 continued to act as ongoing support and resistance level even after price closed outside it.
CB3 closed beyond previous support effectively taking out the longs and now prior support acts as resistance. Now CB4 and CB5 indicate current demand levels. CB1 shows supply along with CB6.
Looking at the bigger picture for the last week EUR/USD has been in a clear down channel and the overnight break out of the channel has clearly failed. Notice also price divergence from the RSX indicator. With divergence that doesn't mean an immediate reversal but you should keep your eyes peeled for a reversal signal. Sure enough there is a large inverted hammer during the early London session today which encourages all the longs to exit. Note the open of CB3 occurs very close to the close of CB1
Fundamental or longer term traders would have found the last week very tricky to trade but you can see how identifying key Bars/Candles on this hourly timeframe it's possible to understand why PA moved the way it did.
Good trades to all.
Villonius
