Trading The Language Of Price (Mapping And Order Flow Shifts)

Good Evening All,

I have only just finished doing some video work for other projects and it's getting very late so if its ok I will post tomorrow regarding the pair we'll be tracking going forward.

LSP

Good Morning,

no problem, the basic principle is the same at all pairs. Looking forward to your videos.

Good Afternoon All,

I have recorded a video going over details of the pair we will be tracking on the thread along with some other thoughts.

LSP

Hi LSP,

Congrats on your thread! After four years of trading I have no doubt that markets are manipulated. Manipulation comes in many disguises... dark pools, spikes, news, etc. I agree that indicators are superfluous. Discovering order flow made all the difference to my trading albeit I still have issues with direction.
It seems fairly straight forward establishing liquidity areas but whether these become short-term or long-term target areas and which direction they take is another matter. What has piqued my interest about your thread is that you establish "target areas".
Of particular interest to me is your EU chart. Your target areas go back to the April 2017 price levels. Considering the massive liquidity levels that have been accumulating since the beginning of the year one would assume that these would be the obvious target areas yet price continued to plummet. In my view predicting a target area is, at best, an educated guess but, along with money/risk management and measured leverage control one can be right more often than not.
Trump talks the $ down and the Fed keep it strong. Euro and US are talking rate cuts. China trade talks are having a huge impact on currencies. There is talk of a recession. Brexit is a shambles, etc. etc...
What 'insight' leads you to predict/establish those potential 2017 target areas? Also, why are 1.04970 and 1.03485 not potential target areas as well?
Thanks for the video today. I look forward to your study on EJ.
Hope this thread goes from strength to strength. Good luck.

Hi davidman,

Thanks for your post and kind words.

Before I continue I will try and get a video posted going over your post. I find it much easier to explain things when I can use my mouth instead of my fingers.

Having said that I'll try and give you some ideas on directional bias and which liquidity pools are more likely to be traded to.

You first need to remember a few things when your reading price. Most traders will look at current price and then go to what they believe is the closet liquidity pool above and below that price. Although maybe not a conscious choice the next step traders go to is which one is current price closest to. And then they reason that price should be going there and start dropping down time frames to look for an entry. The problem with this is you can't arrive at a correct read on order flow by doing this.

What you need to do is go way left and start mapping price all the way to current price going through the order flow and order flow shifts. I can't explain all this in a post but will go over it as simply as I can in the video if I have time to do it this weekend. When you understand what I've just said you'll be able to see where price should be going next because you can see the net balance of orders. This may seem completely ridiculous but it's actually quite simple. Being able to do this takes time and a lot of experience. Price is like a language, you just need to learn how to speak it. (Or in this case read it)

I've added a chart below to give you an example of what I am talking about. I've noted the order flow shift along with areas that show price is reaching for a much larger liquidity pool lower. The thick lines show the upper level liquidity that was raided to increase the larger position and trap traders long and the thinner lines show the lower level liquidity that confirms price is still reaching for the larger liquidity pool. (Like I said it's much easier to explain in a video)

You asked about the 2017 levels I noted as targets. Firstly remember we are looking at the weekly so we have to factor in the time frame and how long moves like this take to unfold. The higher the time frame the larger the position is and of cause the larger the swings are from swing to swing. The targets I have noted are a monthly liquidity pool and a weekly liquidity pool.

You may also be wondering why I'm noting liquidity inside and or around candles and not below the lows of any candles. This is something I keep close to my chest but I'll say this. Liquidity is at every price level and it is possible to know where the build up of that liquidity is because it becomes imbalanced.

The lower levels you mentioned and asked why I didn't note those is simple to answer. They are lower so price has to go through the first levels before I need to consider them. I'm only interested in levels that I can verify have large imbalances.

Lastly I'll say that I'm not a magician or prophet. We can't always know 100% where price is going but we can be right a lot

I hope this helps and as I said if I find time I'll do a short video over the weekend but I can't promise anything.

LSP

Good Evening All,

You'll remember from previous posts that I noted some levels of interest and what I was expecting on USDCAD. I've attached the reaction

LSP

Good Evening All,

Just a quick note regarding our tracking of EURJPY. As I did the first video today I will do the next update tomorrow evening after the market closes or if I can't get round to it as Fridays are always very busy for me I will do the update over the weekend.

LSP

Good Evening All,

Not much to report on EURJPY. As you can see from the charts I've posted price had a slow day today after 2 decent up days. There was some news that came out today but that didn't change much either.

Over the weekend I will do a short video going over some ideas and insights.

LSP

Hi LSP,

Thanks for your reply.

I do map liquidity levels right down to 15 minute TF. Perhaps from what you have said this is why I have issues with direction (impatience??). Your point about not rushing into trades is well taken and heeded.

I also, for the most part, tend to ignore liquidity levels that are months old because I assume that these have dried up. I take it for granted that interim volatility will provide many trading opportunities rather than considering these possible long-term targets.

How do you determine the size of liquidity levels and hence imbalances?

Regards, David.

Hi davidman,

I've recored a personal video for you going over your post.

Hope it helps.

LSP

Good Afternoon All,

Carrying on with the EURJPY Study I've done a short video.

LSP

Good Evening All,

Some levels of interest on GBPJPY for study this week.

LSP

Good Evening All,

NIKKEI 225 Index levels of interest for study.

LSP

Good Evening All,

Although a good distance away I have noted a level on the FTSE 100. I'm not saying price will go there but if it does I am very interested to see how price reacts at that level.

This is something I'll be monitoring and if I see price reaching for it I will post anything relevant.

LSP

Good Evening All,

Days of interest for potential trade setups on GBPUSD and USDCAD.

LSP

Good Morning All,

EURJPY Update

LSP

Good Afternoon All,

A quick update on GBPJPY. (See previous post number 32)

LSP

Good Evening All,

EURJPY update. Nothing of note. Price is continuing higher. We’ll continue to monitor until price shows a willingness to move lower.

This is a very good excersise for those who don’t have patience in their trading. Forcing yourself to stay on the higher time frames does wonders for your trade quality.

LSP

Good Morning All,

EURJPY Video Update.

LSP

Hi LSP,

Appreciate your effort... many thanks.

I still cannot see how Time Frames can determine liquidity strength to the extent that one can determine imbalances.

I guess all will be revealed as the EJ study unfolds.

Regards, D