Price Action in Day Trading by Dadas

I wait to see what happens at the top, drawing my CSCZs.
http://charts.mql5.com/1/187/gbpusd-...salt-ltd-3.png
Notice, the red Candle at the top of Engulfing character
The following short Candle is the CSCZ.

Could you please explain the above, why is the following short candle the CSCZ, I don't quite get it. I presume you are talking about the bearish engulfing candle at the top and the way I understand it is the BE candle directs the sentiment at that stage. The following candle shows the consolidation and you use that to see if there is a breakout or a retracement to that level in order to trigger the trade?

Thank you

Thanking you for supplying a perfect example of what the Trader should never do!
No matter if Your result is positive or negative.

Remember the rule: Enter Short at the top.

Your SL is exactly where Your Entry should be.
And, your picture has nothing in common with what we are discussing here.

If we have identified the trend as Bearish, and we want to trade the H4 Timeframe,
the same rule is valid:
Enter Short at the Top.
Never Enter Short at the Bottom.

There were 2 possibilities:
http://charts.mql5.com/1/188/eurgbp-h4-fxsalt-ltd-2.png
Switch to M30.
http://charts.mql5.com/1/188/eurgbp-...salt-ltd-2.png

This has nothing to do with luck, maybe a little.

P.S.
Please, remove the commercial link, or I will cleanup!

@Spienkies

http://charts.mql5.com/1/187/gbpusd-...salt-ltd-3.png
The red Candle at the top, the one just after the very top blue Candle, is an Engulfing Candle.
Thus, it is a signal, that the price has brokendown from a smaller Consolidation.
The following Candle is a typical PTECZ.
The Price tried to go up, but it never reached the previous High, it Closed below, much below
the previous Candle Open.
Thus, it is a Signal of Potential Trend End, the small Bearish Trend of one M30 Candle.
Thus, it is a PTECZ, a Consolidation Zone on a smaller Timeframe.

The Price can always do 3 things, when in a Consolidation Zone:
1. Continue Consolidating,
2. Breakout, thus forming a Bullish Trend,
3. Breakdown, thus forming a Bearish Trend.

Our role is to see which way the price is going on a smaller Timeframe.

Sorry guys, I just realized, I got my terminology mixed up!
Not a CSCZ - but a PTECZ (Potential Trend Ending Candle Zone)

Please forgive!!!

I must Edit.

Hi Dadas,

thank you for quick response and you are forgiven, I understood it without the terminology.

For educational reasons, I want to reply to Gumrai's earlier questions from his posted picture:


Lower Shadow comments from left to right:
1. Break below zone:
That is not a Breakdown, it is a bounce off.
The Price Brokedown for a moment, but bounced off.
We are working on Closed Candles, not Candles still in formation.
2. Break below:
Yes, this is a Breakdown. A signal, we wait for a potential retrace
to open a Short, but we do not do it now! That is suicide!
The next Candle is a PTECZ, so You could draw the Zone and see what
the price is doing there. It would already show You a Bullish tendency.
See for Yourself, draw the PTECZ.
3. Break below:
This is a retrace, not a Breakdown. The Low was Higher than the previous Low,
and it was inside the PTECZ, thus, this could have been a very early Long Entry.
4. Break below:
Remember, we are working on Closed Candles, thus this is not a Breakdown, but a Breakout.
Actually, it is a Consolidation of 3 consecutive Candles, but the third was Bullish - confirmation.
5. Break below:
Well, it is another retrace with the Low higher than the previous Low.
There is a clear Trend, please look up the definition of Trend!



Upper Shadow comments from left to right:
1. Break above:
That is no Breakout, that is a retrace on the Bearish Trend.
You could draw a PTECZ on the small Bullish Candle just after the long Bearish Candle,
but you would have to also draw another historical PTECZ to see where the price could
potentially retrace. Or Continue up. Right after this Bullish Candle you point to there is
another PTECZ. If you had entered Long on the first PTECZ, you would be watching
wheather to Close that Long or Hold it. In the worst scenario, you should Break Even.
But, holding to the retrace rule, you should not have opened a Long, because there was
no Long type retrace. The retrace is for continuation of Short.
2. Slight break above:
There is no slight break above, it is a bounce off. This is also of retrace for continuation of Short.
This is one of the difficult moments, a moment where the Price can potentially change direction.
This is what the CSCZ of D1 show - the bigger Support Zone.
Entering Short at the retrace to the Resitance Zone, upper CSCZ, still makes sense, we are still at the Top.
Entering Short in the Support Zone, lower CSCZ, can be suicide.
Thus, we must watch out for signal for Long.
3. Slight break above:
This is a red Candle, Bearish, how can it signal a Breakout?
This Candle is part of the 3-Candle Consolidation. It is an indecision signal.
Watch out, wait, see what happens next!
4. Break above:
Yes, that is it! We already have a bounce off some floor level, a retrace with Low higher
than the previous Low, and now the Breakout - Enter Long on retrace to PTECZ.
5. Break above that finally worked. It was NOT an engulfing candle:
The one that worked is a late signal, already. The forming of the Bullish Trend is already visible,
with the naked eye, just relate to the PTECZ. If only now you have believed that there is a Bullish Trend, enter Long at the next retrace, or watch for a PTECZ and what the price is doing there.
You might be too late, though. Here, things happen fast. You might not make the decision.
But, in this case, there was still room for a Long entry higher.

This is how I see it.
Does this answer Your questions?
Does this make my credibility more than zero?

Important, if it has been missed:
If I am using the D1 Zone Candle background on the M5 chart,
it is a refference for Support and Resistance CSCZs of a higher importance.
Working with the M5 inside the D1 context, I am watching for PTECZs.
Short at the Top.
Long at the Bottom.
Relate that to the D1 Zone Candle when working with lower Timeframes.

Apply this same rule to any two different Timeframes, a higher one
in the background and a lower one inside the higher one.
You can trade any TermTrading you choose!

There is one very important issue which needs clearing.

One of the worst things to happen to a unexperienced trader is
that they get messmerized by the current Candle still in formation.
Then, they enter the market upon the current Candles movement which
is the worst thing to do!

Keep this rule as one of the very basic rules of Forex.

Make decisions based on the Closed Candles only!

The Candle in formation can be red-green-red-green.
It can be red for most of its period and become green
at the very last few ticks. And the opposite.

The Candle in formation is misleading and means nothig.
It would be best, if it were not visible at all.

If we do not wait until the current Candle closes, we will never know how it closes.

We need to know how the current Candle closes in order to make our decision.

The rest comes only after that.

good work...what is you opinion about this PA

I try to trade when 1H or 30min candle is almost about to end.
(I also check 1D for top/bottom ans also 5min for profit maximization)

How would you trade?
at the start of a new candle (first 5 min for 1H for ex) or at the end of the current?

(thank you for your time, this is a great topic to discuss for profit maximization)

dadas: the same PA in usd/jpy goes for all x/jpy
this was a great ride almost. 12 hour bear ride while most people tried to go LONG every time a new candle formed (talking about FF)

I must straighten you out on the indicator issue.
You are absolutely wrong!

I have worked with almost every indicator there is.
I have written my own EAs based on indicators,
tested them, analized every single trade, Profit and Loss,
I really do know how indicators work! From the inside!

I will give you one simple example, the Moving Average.
The moving average of the chart is 1.
1 meaning the data is taken from one Candle.
Then you get a line according to the chosen value:
Open, High, Low, Close, plus a few more options.
But this does not tell you anything other than what is on the chart.

In order to see something, you must shift the Time = Period, ie. 9
which means the average of 9 Candles of the chart Timeframe.
This is already 9 Periods late. When you are working with the H1 chart, you are 9 hours late!
The higher the Period, the more Candles to count.

In other words, if you were working with the H1 chart and a Moving Average of 24,
your indications would apply to the D1 chart. We are doing exactly the opposite.
We are working with the H1 chart inside the whole D1 Closed Candle, which means yesterday,
but our important data comes directly from the H1 chart, or M30, or M5.

All indicators, no matter how complex, are based on some Moving Average or a combination
of 2 Moving Averages, or a combination of Moving Averages and another Indicator,
or a combination of Moving Averages and a few Indicators.
But, they are all based on some Moving Average.

How complicated must it get to understand, that the only reason these Indicators
exist is to make life hard? Not a lot of people understand how these Indicators really work.
Most people give up sooner or later.

There is one indicator called NoLag, it shows arrows pointing trends.
Try to trade this one without proper understandig of Price Action.

Try trading with the proper understanding of Price Action.
You do not need indicators.

My "Indicators" are not really Indicators.
They are tools, very useful tools programmed as indicators.

They can not be programmed as Script, because they would not work.

They could be programmed as Expert Advisors, but you can have only one EA on the chart.

So, they must be programmed as indicators, but they are TOOLS.

A fine job, I say.

My PTECZ see it like this.


Now, my D1 Zone Candle with some PTECZ see it like this:

in my chart i use a customer indicator to draw this...for this chart do you use an especial customer indicator...or it is manual?

Dadas,
when you refer to an "engulfing candle" it is really important that you know what an engulfing candle is.
An engulfing candle is a candle with a higher high and a lower low than the previous candle.
You talk about an engulfing candle on the GBPUSD weekly chart where one does not exist.
In an earlier chart, you incorrectly labelled a candle as engulfing.
So when you talk about an engulfing candle in a period of consolidation, it is not clear which candle you are talking about. Is it your perception of an engulfing candle or an actual engulfing candle?

I have 2 of my own indicator-tools which can aid at searching PTECZ.
However, I need to see only those according to my rules.
Manual is much easier.
It is just a Rectangle.

The Zone Candle is drawn automatically, the indicator is attached
in two of my early posts.

Dadas,
do you have a customer indicator to draw PTECZ ?

Did you test this customer indicator?

Well, stick to the book definition, and you will not get far!
The book definition is a perfect model.
Perfect models seldom exist on the chart.

Free your mind beyond definition, see things as they are.
For me, any Candle that covers the previous one completely,
meaning the body covers the body and the body extends beyond
the body of the previous Candle, and it is in the opposite direction, is an Engulfing Candle.

Try to look for models, you will get a signal very rarely.

PS.
I have already written about the so called "protocol" in an earlier post.
Read it.

Thank you for sharing.

Please, I will not hack other peoples programmes.
I need the open source mq4, not the ex4 file.
Only then I can either judge it myself, or ask my programmer friend to give me his opinion.

If this indicator draws what you show, I do not want it, it is useless to my method.

If you can provide the mq4 file, I will take a look at it.

Otherwise, thank you, but no, thank you.

http://charts.mql5.com/1/189/gbpusd-w1-fxsalt-ltd.png

The second is true, it was part of an Engulfing Candle from the M30 chart.

http://charts.mql5.com/1/189/gbpusd-m5-fxsalt-ltd.png

It was simply fast thinking, a sort of abrreviation of the thought.
Maybe not very precise, but it was part of the M30 Engulfing Candle.
http://charts.mql5.com/1/189/gbpusd-m30-fxsalt-ltd.png

And I do realize, that breaking free of ones limitations, braking free of the imposed protocol,
is not an easy task. But, people have done it!

"Free your mind beyond definition, see things as they are."

You say this and yet you immediately follow up with your own definition of what an engulfing candle is

"For me, any Candle that covers the previous one completely,
meaning the body covers the body and the body extends beyond
the body of the previous Candle, and it is in the opposite direction, is an Engulfing Candle."

Even by your definition, the weekly candle on GBPUSD weekly chart is not an engulfing candle.
If every threadstarter redefines common terms used when referring to charts, it would lead to total confusion. Words and phrases need definition otherwise there can be no communication.