Price Action Exercise: What Happened Next?

As you were....

Look like this one didn't tickle users fancy as much, anyhow here is the answer (sorry it is late), first the original chart again:

http://img89.imageshack.us/img89/746...uestion8ug.gif

and now the answer, with some of the suggestions added:

http://img84.imageshack.us/img84/595...2answeruz1.gif

Another on in a day or two.

OK it after the fact. But I'll post it anyway.

Yes its a wolfe wave. It wasn't the one I saw originally before all was revealed. In that what I've marked as 3 in the correct/best interpretation attached would have been the 1 point in my original assesment and the 1-4 target line would have been not hit. Picking the correct ww is something I'm working on.

Notice the two options for the 4 points. In this case the price went to the more optamistic target (then reversed!).

Both assesments share the same 5 point. The price action of the 5 point has a false break out which is considered ideal for a WW. The PA at the 5 point actually look a bit (just a little bit) like a H&S, which I've seen before and is a strong signal.

And of course, theres couple of places to pick the wrong 5 point as well :.


SilverB

Akuma99,

Thanks and many kudos to you for setting up such a wonderful thread here on FF. I became a devotee to using the basics in trading FX after searching in vain for that "perfect" technical indicator or combo of indicators that would spirit me away to the land of Easy Money. I went back to using S&R, trendlines, Fibs, candlesticks and patterns and have never looked back.

I know we don't want to turn this discussion into any type of trade signal thread, but would you consider posting some current charts that we could all put our heads together on in terms of possible outcomes? It would be great to have such a brainy bunch look at the same price action and give their two cents. We could tally the group's answers (e.g.: long vs. short) for a really interesting experiment.

Anyway, just an idea. If this remains purely based on the use of past price action from older charts, I'll be very jazzed to stay active in the thread. However, if there is any interest in analyzing current charts, I think that would be great too.

- Ian

Its not a bad idea, they would have to be longer term charts I guess, 4H or daily charts to make sure it gives time for people to get their answers in time. Ill try it for the next one

Akuma99,

Thanks for considering the idea and giving it a trial run. Hopefully it will meet with everyone's approval as well.

4HR charts would be great, though we could also use Daily charts in order to give those in different time zones more time to respond. I personally trade on the 1H and 4H charts, but having input from the rest of the members on the Daily direction would be very helpful regardless of the timeframe we all trade in, in my opinion.

Best,

Ian

I can't wait for more. I am joining the PF soon and want to learn more about price action. This looks like it could be very beneficial. Looking forward to the next one...

Great choice for a thread Akuma.

This concept is a great way to help people confirm their thinking in regards to market direction.
All the indicator systems in the world will not help someone who cannot visualise how the market moves.

Even though its a bit late, the following is my thoughts on this movement.
http://home.pacific.net.au/~mnemonix/longterm.gif
On the zoomed out chart we can identify 2 key points, A long term Support/Resistance level and a gradual overall up trend line that has offered support for 5 unique candles.
At an overview level, I would expect the current Bearish movement to continue to test this trendline for future support.

Now we zoom in to a shorter time period for more detail.

http://home.pacific.net.au/~mnemonix/shortterm.gif

On this chart the long term trendline from the previous chart is shown in Red.
The blue line represents the short term trend imediately prior to the most recent down trend. At the time of this trendline being broken, we could have been looking to a shorter timeframe chart for an entry candle formation indicating that we should place a short order to collect some pips.

As we missed this opportunity, I have dragged a fib extension from my most recent B to A and am looking for a prospective C and D.
Notice that the market has bounced at the long term S/R level and is retracing the downtrend. Some may assume this will be the end of the downtrend, however I believe the market is merely "ABCD'ing" its way to a further low, testing our long term trendline.
Depending on where C point of our Fib extension (38.2%) is expected to occur, we may be able to place a long order at this point to gather a few more pips during this retracement.

Ideally though, we will now wait for the market to reach Fib C where we hopefully are given an entry formation to place a short order.

I would trade this formation with 2 Short orders (equal lots per trade).
Trade 1
- Market Entry Order at the opening of the next candle after entry formation.
- Stop Loss 15pips above our entry formation candles high.
- Limit Order wherever pip profit equals 1.5 times our pips risked.

Trade 2
- Market Entry Order at the opening of the next candle after entry formation.
- Stop Loss 15pips above our entry formation candles high.
- Limit Order 10 pips above the forecast Fib D. (161.8%).

Upon successful completion of Trade 1, move stop to Entry with trade 2, allowing this trade to continue successfully with ZERO RISK.

Hi mnemonix
If this an example of your future posting, keep it coming. I'll re-read this to get my head around the entry technique
Welcome
Pete

this is a very good thread. it was going all well and why suddenly abandoned?