Beyond the Candles

hi sz

你好.

i seldom trade oz/nz.
look at the chart, i prefer daily, weekly at times, seldom monthly unless very clear pa, i think a short is favorable due to the pb (last thursday) with a long upper wick, against the pb with long lower wick in mid jan.
just my 2 cents.

Hi sniper,

Thanks for the reply.

Yes, i would have a SL to protect, if the SL is triggered, i would find another chance nearby 1.2500.

It is possibly to break down, of course. Since the daily is down trend too.

As for the month, you would find many posts by Fxgroup, where he use the month chart as an important clue.

I guess he would say why the gold have a big short nearby 1748, while he open the month chart to show us. Kidding here, thanks!

[quote=sniperfxmy;5398214]The gold right now is in stand by after the P reached the M R 1750 RN...if the buyers close above it, the W levels (on chart) are the MM and the levels where I wait RETs.

You don't have YET the higher ( W ) TF's confirmation !

Hi Fxgroup, thanks a lot!

So you mean i should have a positive candle in the weekly first before i try to long it, right?

I assume the three bar reversal in daily chart is a buy signal, so i am misunderstanding, right?



If it dont disturb you too much, will you please explain a bit more. Thanks a lot!

I am still confusing.

Hi Fxgroup and others, one more question. Thanks!

Following is AUDNZD weekly chart,


can i assume the long white candle as a high level confirmation, then looking at the right side, waiting for a possible daily candles, i.e. BEOB / PB / DBHLC.

If the daily signal confirm, then there will be a buy entry.

If the above assumption is wrong, do i need to get another weekly level confirmation inside the right box? Then can i make an entry?


My question may be too dumb, sorry for the disturbance and thanks in advance!

Let?s start with the beggiining !
The M is in a bullish channel and this is the pattern that IMO controll actually the P of this pair. In base of that pattern, I will look at the limits of the channel (at its S/R) a certain confirmation.
Since the P is toward to the channel's S, I will wait to see some bullish pattern at the S or if the sellers close bellow the channel, then I will wait the channel to become R or a back in RM with some bullish PA at the channel's S.

I have a plan and will respect my plan, if the P doen't do what I'm expecting, I do nothing and most of all I will wait first the higher TF confirmation !

Hi Fxgroup, Thanks so much! Really appreciate.

May i ask more, sorry for my trivial.

Here "Since the P is toward to the channel's S, I will wait to see some bullish pattern at the S or if the sellers close bellow the channel, then I will wait the channel to become R or a back in RM with some bullish PA at the channel's S."

What i feel confused is the "bullish pattern at the S " and the "with some bullish PA"

- Is this bullish pattern at the weekly level?

- Is this bullish pattern what you mean high level confirmation?

- The following three cases, which case is correct?

a) after seeing the bullish pattern at the weekly level, then make an entry immediately

b) After seeing the bullish pattern at the weekly level, then wait for a retrace, and a daily bullish candle, then make an entry

c) Actually, i understand incorrect entriely

Sorry again for my dumb and trivial. Thanks in advance.!

------------------------------------ ---------------------------
Szpowerx,
Thanks for your replies.
You must be more patient at the moment you are on the way to overtrading, please observe carefully charts, compare each other, make own analysses , make a notes and start with your own diary upon your demo or real account trades. It is really long way and not always logical
;-).

PA patterns are triggers at SnR lvl, but you must see general bias of market and start from M,W,D TF observation . Look at post number 1, find more examples of PA patterns at important lvls. You have too much information in short time so give yourself more time. I 've many mistakes in traiding, but there is always 3% SL line of my account size to forgive me ;-) As I have no much time at the moment will be back today in late evening EU time.
Thanks again for your engagement !

[quote=fxgroup;5094387]Do you remember this RM....some time ago....?
Let's see it...today !

Thread seems spicing up.
I have been PM'd about the same questions by some guys and I feel I'll do the best for everyone if I reply right here.


Basically I feel this thread started assuming the knowledge of some advanced concepts and somehow the basics were left out.

Therefore I'll try post something right here myself, hoping that FXGroup will correct where I do wrong.
Important, if you skip even *1* line of the following text, you will lose money.











1) Open a monthly chart. If the currency looks "static", or "horizontal", or has many dojis (long shadow and tail candles, small body) then discard that currency for now.

2) Look at the daily chart. If the candles are like the above or their size is just 30-40 pips a day then discard the market for now. If the broker spread is larger than 5 pips, might want to discard as well.

3) Ok, now you have a good currency graph open, i.e. EURUSD, AUDUSD etc. Remove every and all of the grids, indicators and so on. Yes I know that your moving average is cute, but it will clutter your eyesight and will fool your most potent indicator: the one between your ears.

The zoom should be reasonable enough to give a picture of the market, no need for mammoth candles. I use a black background as I find it more eye-relaxing.

4) Forget about patterns for now. You WANT to UNDERSTAND the market. You are reading something like a music score on a pentagram, you don't care about the individual musical notes (candle bars) but about the "feeling", the "sound" of the piece as a whole.

The monthly and (usually) the weekly charts are what you look at, to understand what the price is doing (WPD).
The daily (much rarely the weekly) chart is where you look at after the above, to find out if your understandment is confirmed or not and eventually to start a trade.

5) Go to the monthly time frame. Draw horizontal lines at Big Round Numbers (BRNs). I.e. at 1.000, 2.000 and at important Round Numbers (1.3, 1.4...). The key is to only draw those lines where a swing touches them, else you just clutter the graph for nothing. I draw those in yellow.

6) Draw horizontal lines at the top and bottom of each swing close to today's price (no need to draw the whole chart). If you see a lot of close / random swings like in a range market (RM) you may just draw a line above and below it and eventually some more lines inside the RM only where such lines are touched by several candle bars open / close.
The basic version of this method requires you to draw lines always touching the candles open / close (not the minimum and maximum). I draw the monthly lines in bright purple / violet.

7) Look at the trend. It might be nicely trending in one direction or ranging or forming a triangle, whatever.

Analyzing a market is like finding clues in an investigation. You form a picture of what's going on, assembling many small elements and clues until the puzzle is complete.





You have to get trained into recognizing obvious and less obvious patterns, swings and range markets.

I will post examples about patterns, swings etc. later in this thread.

At this point you might have recognized some cool pattern or nothing at all.
With practice you will begin to "see" many, many more things but it's fully possible for a market to be doing "nothing special", i.e. just trending up or ranging. In this case you can still take up many clues: just the fact it's trending up is a clue. Finding a price action pattern like a BUOB in an uptrend is another clue. Finding that the BUOB sits on top a Big Round Number (BRN) is another clue and so on.

8) Once you formed a picture about what's going on on the monthly chart, you switch to the weekly bars chart. You will just change time frame from month to week, you won't open a separate weekly chart.

9) Repeat points 6) and 7) but this time you draw the lines on the weekly chart. I draw them in cyan. You might want to right click (MT4) on the first weekly line (before you draw others), go in its properties => visualization and then uncheck "show all time frames" and only make it visible on the weekly and daily time frames. It helps keeping the monthly chart uncluttered for future analysis.

Look at the chart. You'll notice a different scenario, different patterns and so on compared to the monthly view.
If you did not find any formation like i.e. a channel, triangle etc on the monthly chart, chances are that you will find it on the weekly one.

Once again, you have to understand what's going on (WPD). As Strat (see my signature) would say, the monthly chart is the big boss, the weekly is the boss and the daily is the worker. Therefore the weekly chart is still important compared to the daily, you cannot ignore it.

You will find two scenarios: the monthly and weekly charts "agree": they trend in the same direction, or the monthly has a big bullish channel and the weekly shows a bullish trend inside this channel and so on.
Or they may disagree: the monthly is in an upswing while the weekly is in a downtrend and so on.

If they do not agree, STOP right here. With more advanced tecniques of this method is possible to deal with this scenario but NOT now. Stick to the simple case of monthly agreeing with weekly agreeing with daily until you are MUCH more confident and FXGroup will have explained what to do.

If the monthly and weekly agree, even if you found no clear pattern neither on the monthly nor the weekly charts, it's still fine.

Even if it's not required, something you might want to see before switching to daily is a price action (PA) pattern on the weekly chart. Notice how in this method the candles MUST HAVE CLOSED before you can declare that you found a pattern.


In example:

- if you see a monthly BEOB on 24th of January, then it's not a BEOB yet. It will only be a confirmed BEOB on February 1st when market opens.
- if you see a BEOB on the weekly chart and it's Thursday, then it's not a BEOB yet. It will be confirmed the next Monday when market opens.
- if you see a BEOB on the daily chart and it's 8pm, then it's not a BEOB yet. It will only be a confirmed BEOB when market opens tomorrow (the market opening hour varies depending on your broker).

Now review this weekly chart. Does it make sense? If it does not, then switch to another currency for now.
Does the price tell it's smart to trade in this week? If it says it is not, then switch to another currency for now.
How do you know that price is telling it's smart to trade?
Once again, you have to understand the bigger picture.
If the monthly chart indicates we previously were in a bullish trend, now we are inside and close to the top of a monthly range market, it's NOT smart to seek for buying opportunities, you'll probably just smack against the strong RM upper resistance with a low probability to see any profit.
On the contrary, if we are at the support of a monthly bullish channel and the weekly chart shows a BUOB then it looks very, very good.

Remember this:



If you see a nice BUOB but it closes inside and below the resistance of a range market, then that BUOB is probably just an exhaustion candle and you cannot rely on it!
A pin bar (PB) sitting above the confluence (i.e. multiple converging factors) of a BRN, monthly support line and Fibonacci line, will have a completely other meaning and strength than a small pin bar in the middle of nowhere!

10) Now, let's imagine you found concordant monthly and weekly price and you really got WPD. Switch to the daily time frame and repeat points 6) and 7) again. I draw daily lines in orange. You might want to setup the daily lines to only see them on the daily chart, in order to keep weekly and monthly charts uncluttered.
You won't need to draw more than 2-3 daily lines and later on you might even stop drawing them at all.

11) You'll notice how, once again, a whole different scenario of patterns, channels and whatsnot is before your eyes.
If price is going against the weekly or monthly charts, switch to another currency. In few days you may come back and see if it looks better.

The best trades happen when monthly, weekly and daily are all concordant.

Furthermore, price should be doing something useful to you, i.e. be at the bottom of a RM / channel during a monthly and weekly uptrend. It's always dangerous to just enter the market hoping price will break thru resistance the next day.

12) It's finally time to find WPG (where price is going). If location is good, then check if price is weekly line retracing (RET W) against something solid and forming a candle(s) price action pattern. If it is, then this is a confirmed potential trade. Weekly line retracing means that price hit a weekly / monthly line / BRN / trend line, that is a powerful line. Daily lines RET won't do!


Examples:

Monthly and weekly uptrend. Price is in daily chart RM where P hit the same monthly support (S) 2 times. Today it hits S again and forms a BUOB. This would be a class A trade.

Monthly and weekly uptrend. Price hit a top 1 week ago and today hit a second and formed a bearish PB. This is NOT a safe trade, the double top pattern should be confirmed first (broken + RET). See future patterns examples posts for more info.
But the same trade would be a class B trade if this was the second top with a weekly chart showing price going up to that price level 5 times in the prior month and always halting there. Location!

Monthly and weekly uptrend. Price broke a D RM resistance upwards, then fell down on top of the RM resistance and closed above it and formed a BUOB that closes above the RM highest candle shadow. That's a class A+ trade *if* that RM resistance was also a weekly line.
But the same trade is garbage, if the monthly chart shows a BRN sitting 20 pips above that BUOB. Location, context and understanding WPD!

13) Once we found this class A setup, the PA candle pattern gives the signal to trade. If there's no PA pattern it's best to skip the trade (until you learned and practiced a lot more about this method).

14) Now it's time to plan the trade (PTT). You'll decide in advance where to make money management (trail the stop loss) and / or take partial / full profit. There are many ways to do this and FXGroup may show some of them. Generally you'll move the stop loss 1 swing away from where price is swinging at the moment and take profits when price is about to hit weekly / monthly / trend / (B)RN lines.

You place a buy stop order above the PA pattern + spread. If there are nearby levels (even daily) or nearby candles maximums (minimums for bear patterns) go some pips above (below) said PA pattern, then the stop order has to be moved a bit till it's above (below) those candles.

Don't risk more than 2% of the account per trade. In the beginning only open one trade at a time, it will be hard enough as is.

You probably want to save your analysis in a journal for later review about what went right and what went wrong.


Example:

Spread is 2 pips. There's a bullish PB closing at 1.3111 and the previous candle maximum is at 1.3113. You put the buy stop order at 1.3313 + spread = 1.3315. This helps against stop loss hunting or just being taken in the trade because the sellers wanted to take liquidity where they did already 1 day ago.

The buy / sell stop orders are those orders that trigger when P goes to the level you specified, even without you being at the computer.

The stop loss has to be placed below (above for sell orders) the pattern. This includes putting a SL all the way below (above) PB tails. If there are nearby candles whose minimum (maximum for sell orders) go slightly below (above) the PA pattern, the SL has to be moved below (above) them.
If there is an important liquidity level nearby (a bunch of previous candle minimums / maximums go down to a similar level) the SL has to be put below (above) them.
There will be examples about SL placement in future posts.

15) Now that you planned the trade (PTT) you go to bed and let the market trade the plan (TTP) by itself.

Only some platforms allow for unattended partial take profits / SL moving, so you might have to go to the computer every day at market open and manually move the SL and partially (or fully) close the position.

16) Update your journal. The trade is over.







- Practice for 3+ months before taking the first non simulated trade. If you are not profitable in those 3 months, don't even try trading real money. Get profitable FIRST, risk money AFTER. It takes YEARS to become a practiced trader, it's a real profession and like a profession you won't learn all its secrets in few days.

- You must be ready for the market but the market has also to be ready for you. If the market is doing "nothing special" or is just a random mess, do NOT trade at all, switch to another market, there are thousands!

- Don't rush taking every possible trade. Overtrading is THE newbie trader killer.

- When unsure, don't trade.

- Don't move the stop loss. EVER. You WILL get burned otherwise.

- Don't check a running trade during the day. You WILL feel sick and will suffer a severe nervous break down.

- Don't trade every candle PA pattern. First you must understand the its context, its location and WPD.

- The market is never wrong. Even if it was, it can stay wrong for much longer than your account you can afford to be right.

- If you skipped even one line of the above article, then you are about to lose money.

Dfumagalli,

Well done ! Thanks for your time.

Thank you Dfumagalli, for a really good explanation

NZDJPY closes to a very interesting RM R. All we have to do is to wait to see who will be in RM control.

It will be interesting to see how the W close.
The P is at the old RM's S (now R) and a very strong dynamic R level.

Buyers loading with more buyers

WPG+WPD=
W Bullish in lvl control.
M RM

The P reached an old W R that now acts as S with the D stuck in dynamic RM (bullish flag) as answer of WPG on a D chart.

Textbook Guppy trade from FXGroup! nice job

Nice thread man...(not many good once on forexfactory lol)



I will be looking to buy pounds this week on this currency.
Tons of demand price is rejecting lower prices.