when you get a chance can you answer my question, why will the price reverse and start falling again?
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This statement was written "Now, if enough selling and liquidation of losing positions happen at the broken support level, the price will reverse and start falling again."
My question is, why will the price reverse? based on the statement above
If enough people are selling EUR and buying USD the price should fall. The EUR is weakening. When EUR weakens, a downtrend will occur. The only way for the price to rise(reverse) is to buy EUR and sell USD
Again my question is, why will the price reverse?
Thank you in advance for taking the time to answer my question.
When you get an answer from one of our members here, just remember that forex prices are set by international banks, not by private retail traders. If all the members of babypips got together and bought EUR/USD at the same time it probably would not move the price by even 1 pip.
Ignore the “reverse” and keep the “start falling again”
The theory is bulls have bought, and normally they place their stops(sells) below support… So if a support is Broken, the stops(sells) Will Make the price fall even further
All this said… IMO it’s absolutely a useless lesson for trading purposes, as you’re going to see as many breakouts as fakeouts.
Price action movement is caused by order flow. Without orders, the price won’t move.
As an example, on an upward trend towards a S&R zone winning traders can choose to wait, but losing traders would be more likely to close their positions or get stopped out. At first the price will fall which could attract more buyers, plus additional positions from the winning traders.
Which, if strong enough could break through the zone. If the order flow eases off, then you could see a reversal.as the price falls.
Depends who is in control, the bulls or bears. Whatever, I place my T/P well before the price action reaches the zone.
Thank you for your quick response.
Understand. When you said, “The theory is bulls have bought, and normally they place their stops(sells) below support”, the answer became must clearer! Thank you for your sharing your wisdom with me.