Institutional Price Levels
GBP/USD 4hr reacting at price level 1.30000
These are levels in the market that banks and other institutions use to change/alter the direction of price. For example with GBP/USD you can see the price comes down to 1.30000 before rejecting it and making an upwards movement.
USD/CHF Daily reacting at price level .98000
In this example, USD/CHF is trending in an upwards direction and the institutional level is used as a support level for price to come down to it before rejecting it and continuing to uptrend. I Always draw zones around these levels as price may not react directly to the level and call fall a little bit below or even a little bit before touching the institutional price.
Price moving past the blue line but only by a small amount
The Reason price can fall below these levels is because of a trading theory called “Stop Hunting” basically the institutes know retail traders are using these levels so they Short the currency to push price past the level and to where they think the retail traders stop losses are. Traders are taught from the beginning to place their stop losses above/below previous highs/lows, and if you haven’t noticed already, the market tends to take out those stops and then head the direction of their original analysis.