The One: Price Action and Reaction

Gold

AUDUSD
Daily/ 1h

Follow up

Wyckoff Method

6E Euro Futures

6A 15min Audusd futures

6A AUD
6E EUR
MNQ Nasdaq

This looks like an interesting indicator or EA. Please tell us more.

Thank you. These indicators use supply and demand, as well as a few candlestick methods, as well as the Wykoff method. If you have any suggestions for correcting or completing this method or other methods, I will be happy to help.

EURUSD short trade setup

Great chart. That was (is? TBD) a nice short setup. The A/R lines you draw are simple and clear on the chart, but I still prefer to use PF's, which as it turns out gives a similar setup for very similar lines.

Where you have drawn your green centerline, if we make that the same as the red ML, but with a slightly different pt2 (B) than where your lower green Action line is anchored, price went slightly above what would have been a perfect alignment with what you drew. The blue ML has the pt3(C) moved to where the pivot actually formed, which is slightly beyond the red ML. This is less so in alignment with your green Centerline, however, it does perfectly touch the high of a modest pullback as price rose from the blue pt2 upwards to the blue pt3. (There is obviously the earlier higher high vs the pt3, but it is still legitimate to look for a later, wider, pt3 to form, if it creates good resonance with the PF lines).



Here is an EU,H1 chart showing the blue PF along with its Half-, Third-, Fourth-, and Sixth-lines ("PAR" or parallel lines) on the chart. There is excellent intra-PF resonance to these PAR lines that is strongest when the pt3 forms exactly where it did. The strongest influence, IMO, is the perfect touch of the high by the blue ML, but the other lines, esp. the two half-lines, are in excellent agreement for a reaction at pt3.



For the next chart, I'll draw a black PF, and two derived PF's: Mod.Schiff (MS), and what I call "MP13" (The ML passees through the mid-point between pt1 and pt3). I'll show examples of a very useful and specific notation I use to label PF lines.

Regarding your blue A/R lines, recognize that with the black PF as drawn, then your light-blue A/R line set is exactly same as the magenta MS (Mod.Schiff) for this black AN (Andrews) PF. Regarding the black PF, could it's pt3(C) have been anticipated using resonance? There is very little to go on. The gray circle shows some resonance with the black AN+0 (ML) line, but not for the absolute Low of the pivot, but more so of H4 Open/Close prices that clustered along the black ML (as it eventually formed later, that caused this "resonance").

I would note that the two pink circles. At the first, price rose up and held ~2p shy of the the magenta MS+1.0 (UML) line. I believe that could have been a tradeable short if I were to see it live, though a perfect touch would have been easier. (This is where it could be helpful to consider a parallel channel -- exactly like your blue channel -- where the reference line would be drawn from black pt1 down towards black pt3, BUT would instead be anchored at the most outside previous pivot low vs. the final low; this sharpens the slope but just a tiny bit, and with this change, the parallel line as anchored from pt2 would come down just slight sharper than the magneta MS+1.0 line; it would have been a perfect touch at the first pink circle!).

After that, price fell and formed a low pivot exactly at what, in my experience, is another strong derived PF line. This is what I call the "MP13-1.0" line. The "MP13" PF is a derived PF name I came up with, and what it means is that the olive-PF ML passes right through the "mid-point between pt1 and pt3". In other words, the slope of the olive PF rises from pt1 to pt2 (which is the "MP13+1.0" line). The olive PF ML has the same slope (MP13+0 line). At pt3, the olive MP13-1.0 line rises from black pt3, and it is this line that the green circle shows a perfect touch and reaction to it.

After that, price rose to the most recent lower-high, which as you can see, just barely exceeded the magentat MS+1.0 line for this PF set.



Taking all these PF's and A/R lines together, what is clear is there was good confluence for at least a pullback reaction, which is what we've seen so far.

In support of a major bigger pullback is all the great resonance to the blue PF that lines up perfectly (in the 2nd chart shown), and that the magenta MS+1.0 line has also hit twice and held, so far.

NOT in support of a major pullback ore reversal is two things: 1) One is it that the pullback from the first pink circle down to the green circle is clearly an "A-B-C", which suggests a corrective wave rather than an impulsive wave. So, price may hold above the green circle low; or, maybe it's just a little "a-b-c" in a bigger correction, that was an "A", the move up was a "B", and now we're starting a "C" wave down. 2) Price will have to clear below the MP13-1.0 line first, and then see if it makes a lower-low.

In the bigger picture, I remain bearish EU for fundamental reasons (like their huge energy crisis), but in spite of this, the EU will still rise for at least some pullbacks before going lower.


I find it very difficult to spot very large trends as they start. For those, Daily/Weekly/Monthly charts help the most. On these H4/H1 charts, I find it much easier to pick some specific segments of a move, without my knowing whether it's the start of something small or something big. I'm going to just *guess* that we just started an EU move down that is just beginning, but hey, it could go either way.

Dear Pips4Life, long time no speak. I remember your tip(I believe it was you) to draw a pitchfork and place the ML on price pivots to see if its possible to catch the lower/upper parallel. I sometimes like to use this tool to quickly grasp an AR set, cheers.

I like how you look for the wider pivot for p3 and not necessary the highest, which is indeed legitimate. I would have chosen the highest one in this instance and draw in a sliding parallel to look to trade from. A technique I like to use is to take a trendline from P2 - P3 and simply project it from the most recent low. If price breaks below the trendline its a sell signal(Vice versa in a long setup). If you want to go classical you could draw in a mini fork(Black in the chart) and wait for the lower parallel to be broken to consider a sell signal. In either case I would look to sell from the sliding parallel.



I'm not a big fan of the inner % parallel lines, but to be fair in the way you use them here is good.(second chart) You use them to project a potential upper parallel, or actually a reaction line! You simply use the PF tool for convenience. It shows that pitchfork and AR sets really are the same thing, and if you really want a difference its that AR sets are one step ahead as a leading indicator. (Maybe we already had this same conversation in the past)

I like your last chart most, that MFP13 PF could be drawn using a MS fork(P1-P3-P2) I sometimes use the MS PF like this to find reaction lines. If this were a bull trend I could see you would want to trade a retest of your Olive lower parallel. In this case I would want to see if break to confirm my bias.(Which you mentioned yourself) I don't trade EW or fundamentals myself, but maybe one day..

Thanks for sharing your thoughts, I appreciate that. Great to see this beautiful methodology not dying out.

Two charts to detail out the initial green CL:

Nice charts, again. We're on the same page, that PF's and parallel channels are essentially the same thing, just different ways to draw and visualize channels.

Regarding your last two, and your interesting techniques to copy and stack sections, yet another example of using PF's to look for similar A/R lines is to draw the black Andrews PF shown here, then make the MS variation of it, and draw at least the main PAR lines. I added PAR2 (half-lines) and PAR3 (third-lines) also, although the PAR3 lines are not capturing many turning points (underscoring your point that the in-between lines are not always helpful). Mostly its the PAR and PAR2 lines (see pink circles).

Right after the MS could be drawn, there are immediately some major turns that follow, starting with MS-2.0 low, some struggle to clear above MS-1.0, then a strong peak just shy of MS+0. Price fell, but not much below MS-1.0, and retested MS+0, this time at the actual line. It fell sharply to find the major low at the bottom perfectly at MS-1.5. From the bottom to top, there are 6 more pink circles of interactions with the MS lines.

You make an interesting point about the parallels of the *previous* (larger black) pt2-pt3 line. I've turned on the PAR lines for this smaller PF, and it turns out that it's almost the same slope! The point would be that this earlier, smaller PF perhaps offered some clues for what the next larger pt2-to-pt3 might be.

I find it interesting that from the major low, price rose roughly just before reaching the MP123-4.0 line (my name for this derived PF with the slope of pt2-to-pt3). From the major low, I drew in a brown SP. I've made some tan ovals showing near approaches to the actual MP123-4.0 line. Then just prior to the recent high peak, it exactly touched the MP123-4.0 line and rose to the (final?) high. The break-and-retest of this MP123-4.0 line is clear enough to have traded.

The recent low is marked with another brown sliding parallel, which is at MP123-4.453. (This is not a known PAR* line I could have anticipated for the low). But the point you make about watching that (or similar) parallel for a break -- to see if a down-trend may continue -- is an interesting one.

You were referring to a different, larger black PF, with the slope from this major low to the recent major high. I've drawn an orange parallel channel, and the slopes of the two are almost the same.

In fact, my orange channel starts from the major low, BUT its pt2 reference (that establishes the slope) is not the major high but in fact the very 1st pullback of these major rise up. Since it intersects at the major high perfectly (at least on this H4 chart), the slope is identical. It's another clue that the recent high was significant.

Hopefully you don't get lost in all these details. I'm packing a lot into a single chart here, but I'm guessing you will make sense of it, FWIW.

Im glad to see you guys posting here. Here are some things I have been observing in 6A 6B 6E MNQ IBM and AMZN

@Eagle hi m8, hope you are in good health. Catching flow nicely in those charts.

@ Pips hi, haven't really gotten the time to reply. cool grid work, those are some very nice touches. That down sloping black fork did a very good job with creating a story for price.

I don't get lost in your details, just need some time to absorb your text but I got it. Nice observations. And yes, being on the lookout for a line to break to confirm bias is a powerful tool.. Because those will often be broken before the recent swing high/low will break. Giving you a lead on the competition. And often a feeling of certainty while others are still unsure.. The break of such a line should give confidence within the confines of your current trade setup.

Sorry I don't go deeply in your material. Gotte go again..

Took a second trade:

1h EURUSD short setup:

@Eagle, I always like seeing your charts. Gets me thinking in ways I might have seen already but often there's more, which expands my awareness.

@Dinnersticks, the advantage of your charts is their much cleaner than mine, so the key details stick out better. I draw both ways, but maybe need to balance towards the bigger cleaner picture. But, I still love my details, so, gotta draw both.

The interesting thing about your blue PF is that the recent touch rose above it, just a bit, with something of a hint that it was trying to break higher... but I've spotted a reason why it might have stopped, and if it plays out, it would support the bearish EU for at least another ~125p. Of course, I'd always adjust my thinking based on what develops next.

In this first chart, it would be reasonable to draw the black Andrews PF like this, with its pt3(C) at the gray circle. The magenta PF is the derived MS. Price has broken below the AN and then the MS, and in fact has just come up ~7 hours ago to touch the underside of the MS-1.0 LML. (Pink circle). (It has had 3 other previous serious approaches to touch the same line, so this would be the 4th time and is the closest approach).



Anything could happen, and it could even make a 5th approach to the MS-1.0 line which would not invalidate the following, but since I'm already short, I'll be happy if something close to the following scenario plays out.

I've seen examples where a previous MS-1.0 line (which is identical to an extended trendline drawn from the Andrews pt1 to the pt3) becomes a FUTURE Andrews ML!

Here I've drawn the red Andrews PF whose ML passes through the previous black pt3, hence it also has been touched by the recent minor high. If price falls and somewhere touches the red PF-1.0 line, that point could become the red PF pt3, where the ML would have very good "intra-fork resonance". (This is exactly what Morge talked about as a "hunt for C" technique; I call it "hunt for pt3" due to my pt1, pt2, pt3 terminology for the three PF pivots).

I've also drawn basic Fibo retracements. The 50% often gets a reaction, hence I've drawn the red PF pt3 there, but a touch could occur anywhere on the slope red PF-1.0 line.

Just for kicks, I drew a blue Channel that would align the top pivot high, and a previous strong, "outer" high, then the lower channel line from the black pt1. (I didn't spend any time looking for potential A/CL/R line sets, but that's another possibility). (It's a lower target than my red PF-1.0 line).

EU did in fact bottom out and break higher, but it has now come up to retest the same big trendline it did a few hours earlier, so it's still a possibility to act as a future medianline.

My earlier short was in nice profit. Greed and overconfidence in the bearish bias got in the way and it closed at BE, but I am short again from the latest top. (It still might be too soon because NY open in a hour often forms new highs)

Nope. Didn't stop at my trendline. Now it's pausing at a trendline that connects the highest high, and the next lower high. We'll see... I'm going to focus on charts instead of posting.

Thanks for sharing your observations again. The previous MS 1.0 line you mention.. which would become a future extended ML, would be called a center line in my book. ^^

My charts used to be very cluttered, then I realized I only need those few handles which will portray the most likely scenario. Less is more they say.. And it helped me become more confident in taking trades. Trading pitchfork and AR sets is(should be) very mechanical. If A holds.. and B gives.. look to trade from A..

Currently seeing another short setup.

Seems like it worked splendid though, tested and rejected. I'm still very much biased on the short side. Todays attack of the highs provided a nice chance to short. A break above 1.075 and its gameover for shorts Imo.