AUD/CAD - 60 minute chart

In this section we move to consider examples form the faster timeframes starting with the 60 minute chart which is one of the most popular. As before these are all taken from the spot forex world

When considering charts over the slower timeframes, there will always be a rise and fall as the session moves from deep liquidity in Europe, London and the US, into thinner volumes in Asia and the Far East. This does not invalidate any analysis, and indeed provides a benchmark session by session.

I selected this example for a particular reason and that’s to show the time a pair can remain in a congestion phase, and even when we see strong volume price analysis signals, patience is always required. Remember, markets spend far more time in congestion than they do in trend, and to take advantage of any trend, we just have to wait for the congestion phase to end.

If we start to the left of the chart, the pair rise initially with two up candles on high volume, but then move into congestion for the first session.

In the second session the highest volume is under the shooting star candle. Clearly the market makers are selling into weakness here. This consolidation phase continues into session three, before the ultra high shooting star candle appears, but note the volume. This is in the Far East and Asia session and clearly this is a trap move as there is very low volume under the candle. The trap is being set.

Finally the market breaks in session four on high volume, with the pair then driven lower in session five as the week comes to an end.