Thinking of Kranes question about getting a reversal out of the demand level. I was thinking what would be better buying at the demand or selling at the supply if it goes back up there. Looking more at the longer term as either will give a few pips. As it is a Sunday and it's raining I thought it would be fun to try to make a prediction here. This reminded me of the first book I read Stan Weinstein Secrets of profiting in bulls and bears markets. He is analysing mostly using a weekly chart and a 30 MA breaking the market down into 4 phases. Now I look at it again he basically describes supply and demand in the big picture. Basing(Demand), The Top (Supply) and the 2 phases between up and down. Looking at the weekly chart of AUDUSD it is in what Stan describes as phase 3.
"THE TOP AREA - Eventually, all good things come to an end. In the stock market,this takes the form of a Stage 3 top as the upward advance loses momentum and starts to trend sideways. What's going on beneath the surface is that buyers and sellers are once again about equal in strength. In Stage 2, the buyers were far stronger and overwhelmed the sellers. Now that the advance is ending, the stock is in equilibrium and the mirror image of a Stage 1 base starts to take shape. Volume is usually heavy in Stage 3 and the moves are sharp and choppy. If you've ever heard the expression that a stock is"churning" (moving sideways on heavy volume), this stage is anoutstanding example of it. The heavy volume on the part of buyers,who are excited by the improving fundamentals or "story," is met in equal measure by aggressive selling by the people who bought at considerably lower prices and are heading for the exits. Here is how all of this takes shape on the chart. First the 30-week MA loses its upward slope and starts to flatten out. Whereas Stage 2 price declines always held at or above the MA, the stock will now tiptoe below and above the MA on declines and rallies. Once a Stage 3 top starts to form, traders should get the heck out with their profits! Investors, however, have more leeway. Once this stage is reached, I suggest that investors take profits on only half of their position. There is always the chance that the stock willbreak out on the upside again, beginning yet another Stage 2 upleg.If you still hold half of your original position, you'll then be able to benefit from the upward movement of this new Stage 2. But it's imperative that you protect your profits on the remaining half position with a protective sell stop set right beneath the bottom of the new support level." ~ Stan Weinstein.
Now I scan though this book again for the first time in years I realise it is all about supply and demand. He describes refining the buying process and talks about "the less resistance the better" nearby supply in other words.
Support level seems to be 2009 high 0.9400. Interesting to see if holds or breaks and we go into a Stan phase 4 decline.
Nice video with Stan about the 87 crash-
http://www.dailymarkets.com/stock/2011/ ... ket-crash/
1. Big loss, 2. Small Loss, 3. Big Win, 4. Small Win --- just prevent 1.