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Forex Institutional Price Levels
*This is not financial advice. I am not a licensed financial advisor. Seek a licensed financial advisor before making any investment decisions. I am not responsible for losses or gains that may or may not occur in the marketplace. Forex carries a high level of risk not suitable for all investors.*
What are Institutional Price Levels when referring to Forex trading? These are levels that can be considered vital turning points in the marketplace. Across various currency pairs like GBP/USD, USD/JPY, EUR/USD, EUR/JPY, and even the US Dollar Index (DXY) institutional pricing can be applied.
Just like a pyramid, there are certain levels to these pricing points. For example, the most compelling price level in my experience has been numbers that are zeroed out like 1.30000 (GBP/USD) or .98000 (USD/CHF).
In this example, Institutional level pricing gave support to continue the overall uptrend after a downtrend correction. Another way to see if the pricing is valid is to pay attention to the daily and weekly candle closing. If the price is heading down but daily and weekly candles are closing above the institutional level, you can confirm that price was a factor in the turning point. I always assume the price will continue through a level and not just turnaround directly at the zeroed out pricing.
The reason that price won’t directly stop and turn at these pricing figures is because of a market theory called “Stop Hunting” which indicates that the market is manipulated further down or up to capture pending orders. These orders can be Buy/Sell Stops or Stop Losses (long or short). 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. Crazy right?
Another form of Institutional Price Levels are mid-figures. These are prices that are directly in-between two zeroed out numbers. For example, 95.50 is a mid-figure, between 96.00 and 95.50 (DXY) in the chart below.
Trading the 95.50 level the first time would have been profitable but what I want to direct your attention to is the third time price reached this level. Notice that the price tagged just a few points higher than the previous highs. It’s almost as if the market is algorithmically engineered to push to that level on purpose! Now, at the time of this screenshot, we can see the US Dollar falling rather “quickly” after that price was met. Coincidence? I don’t think so.
