Upthrusts always signalise weakness in the background of forex instrument. Upthrust appears in overbought instruments, after substantial increase in price while there is weakness being present in the background of instrument – so far hidden from the masses of traders.
How to recognise upthrust in forex
Upthrusts in forex are manifested as candles with wide range upwards. They are accompanied by ultra high volume (volumes forex indicator). Candle will close near its bottom, thus creating extremely tall upper wick. This type of candle may appear in any timeframe.
With this forex formation volume in not key element. Formation may appear even on low volume at the end of distributions signalising no demand in that case.
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Upthrust as money making manoeuvre.
Upthrus is profitable money making manoeuvre for market makers. There is a ruthless mechanics to its purpose. Price moving suddenly upwards will lure hesitant traders into entering the uptrend (that is just about to end). It is removing stop loss orders above the market. Those belong to traders that correctly predicted trend reversal, but were sloppy with their position timing and stop loss placement.
Often times, positive news in media will be used to further improve effects of this forex money making manoeuvre.
Do not make any mistake about it. This manoeuvre is a trap that often times catches institutional bank traders and fund managers too.
If the market makers still saw the market as bullish, same type of candle would be pointing downwards - failed test. (check long legged doji candle formation in forex).
It is almost hard not to make money on forex looking for just this single type of forex formation (upthrust forex strategy)
