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The Market Explained by candle sticks and price action

  • #101
  • Apr 12, 2010 10:21pm Apr 12, 2010 10:21pm
4/08

Yet again nothing fancy.

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Bear Trend line was broken Then supported.
Good evidence of support was that a bull trend line was respected and price never even tried to test the line again.

Three great pieces of evidence were

1. Bear line break and support
2. EMA as Support
3. Bull Line Respect
4. Hammer at the EMA Support area.
  • #102
  • Apr 12, 2010 10:25pm Apr 12, 2010 10:25pm
4/09

Look familiar ?
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So were back into a bull trend after midnight rally.

Bear line break, Failed bottom Giant spike of exiting bears and entering bulls.
  • #103
  • Apr 12, 2010 10:43pm Apr 12, 2010 10:43pm
4/10

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A bull trap early in the morning than a bear trap later.
  • #104
  • Apr 12, 2010 10:44pm Apr 12, 2010 10:44pm
Any Questions? Feel free to ask
  • #105
  • Apr 13, 2010 5:59am Apr 13, 2010 5:59am
Hi Fuzzyzc, I have a question on the 4/08 chart. I imagined that I would have noticed the break of a steeper bear trendline first (yellow line below, labelled A). When that was broken, I probably would go long after a hammer signal (also shown in the same graph).

Am I correct to say that it's a valid entry (though not as good as the one you showed), or I might have interpreted it wrongly? Thanks.
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  • #106
  • Apr 13, 2010 9:12am Apr 13, 2010 9:12am
Quoting fthingf
Hi Fuzzyzc, I have a question on the 4/08 chart. I imagined that I would have noticed the break of a steeper bear trendline first (yellow line below, labelled A). When that was broken, I probably would go long after a hammer signal (also shown in the same graph).

Am I correct to say that it's a valid entry (though not as good as the one you showed), or I might have interpreted it wrongly? Thanks.
Definatly not a bad little trade. But its important to understand that the best trades are with trend or the first leg of a reversal.

Bulls showed that they could take power(your marked trade) and eventually did this was the trade i showed. I would have been a little skeptical of that trade because it was still looming under a previous longer which mean stronger bear line.

Its just a riskier trade that is all, and with less evidence of continuation.
  • #107
  • Apr 13, 2010 4:21pm Apr 13, 2010 4:21pm
Hey Fuzzy. Good thread . Tex
  • #108
  • Apr 13, 2010 6:53pm Apr 13, 2010 6:53pm
Quoting Fuzzyzc
Definatly not a bad little trade. But its important to understand that the best trades are with trend or the first leg of a reversal.

Bulls showed that they could take power(your marked trade) and eventually did this was the trade i showed. I would have been a little skeptical of that trade because it was still looming under a previous longer which mean stronger bear line.

Its just a riskier trade that is all, and with less evidence of continuation.
Got it, thanks!

By the way, do you mainly trade EUR/USD? I notice that most of your examples are in this pair. Just curious...
  • #109
  • Apr 14, 2010 2:57pm Apr 14, 2010 2:57pm
Quoting fthingf
Got it, thanks!

By the way, do you mainly trade EUR/USD? I notice that most of your examples are in this pair. Just curious...
I will trade anything with a tick BUt.... i like the eur/usd. i has good volume, trends pretty well on the 5min, GBP is also comparable, The yen i feel trends better on the hr and daily. But i like to day trade the EUR.

IMO each currency has its own flavor and i like the e/u.
  • #110
  • Apr 20, 2010 6:37am Apr 20, 2010 6:37am
Quoting Fuzzyzc
I will trade anything with a tick BUt.... i like the eur/usd. i has good volume, trends pretty well on the 5min, GBP is also comparable, The yen i feel trends better on the hr and daily. But i like to day trade the EUR.

IMO each currency has its own flavor and i like the e/u.
Hi Fuzzyzc, I made some pips today going long EU after some bear trap. Think you've profited too!

Can you share how you manage the exit once you're in a trade? Do you have some pip target, use trailing stop or use price action to dictate the exit?
  • #111
  • Apr 20, 2010 5:09pm Apr 20, 2010 5:09pm
Quoting fthingf
Hi Fuzzyzc, I made some pips today going long EU after some bear trap. Think you've profited too!

Can you share how you manage the exit once you're in a trade? Do you have some pip target, use trailing stop or use price action to dictate the exit?
Good Job Fthing!
Today 6am to noon was pretty bearish, but im assuming your talking about the bull run up from midnight to 6am. Eastern Standard Time.

There is two categories of exiting (basically the same as entering counter-trend) you wait for a Channel line overshoot or a trend line break.

I like to ride the impulsive waves (the big price jumps) and then exit when im comfortable.
Most would say that it doesnt maximize your profit. I figure and its just my opinion that the extra percent isn't worth the risk of a quick reversal down to my stop loss of 1% loss.

I think this is less stressful too. Just sitting and waiting through the ups and downs on the way up to the collective all taking profit. Not for me.

You actually can make a bit more and with less risk (IMO) than going long the whole move. The truth is both ways will work its just really your preference.

I can tell you one thing taking a little profit and leaving a little on the table at break even is probably a good idea.

At any rate Good job Fthing. Stay disciplined.
  • #112
  • Apr 20, 2010 8:28pm Apr 20, 2010 8:28pm
Thanks for all the sound advice!

I always find myself struggling between letting winners ride and taking quick sure profits. But you're right it's less stressful to do the latter, and once a trade is closed I can have all the free time too!
  • #113
  • Apr 20, 2010 8:42pm Apr 20, 2010 8:42pm
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Hi Fuzzy, You see my blue arrows one on the pin bar and the other large bar.Which one would you have taken ? Are would you have taken either trade since it was around lunch time for the uk ? Am i close ? Thanks,Tex
  • #114
  • Apr 20, 2010 8:56pm Apr 20, 2010 8:56pm
Attached Image (click to enlarge)
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This candle did break the channel but wasn't a wick but still would have worked out Interesting Tex
  • #115
  • Apr 20, 2010 9:31pm Apr 20, 2010 9:31pm
Quoting fthingf
Thanks for all the sound advice!

I always find myself struggling between letting winners ride and taking quick sure profits. But you're right it's less stressful to do the latter, and once a trade is closed I can have all the free time too!
Trading is scary! everyone wants to win 100%. The truth is that even these price actions setups can fail. If you use sound judgment and understand whats occurring behind the bars on a medium and large timeframe of the market your going to come out on top.


After a successful move you just wait for another setup (with trend). because after most moves their is always anxious counter trend traders waiting to for example short an up trend or vice versa. They might make a little profit or get squeezed out but the truth is Their counter trend efforts failed.
  • #116
  • Apr 20, 2010 9:45pm Apr 20, 2010 9:45pm
Quoting tex123
Attachment This candle did break the channel but wasn't a wick but still would have worked out Interesting Tex
Ok one thing Tex. I dont know if i clearly defined it or not but Channel Lines for bear trend goes on the bottom (underneath price) and trend lines for bear markets go on top. So what you have drawn would be a trend line In the second post Right?
  • #117
  • Apr 20, 2010 10:29pm Apr 20, 2010 10:29pm
Quoting tex123
Attachment Hi Fuzzy, You see my blue arrows one on the pin bar and the other large bar.Which one would you have taken ? Are would you have taken either trade since it was around lunch time for the uk ? Am i close ? Thanks,Tex
The pin bar (Inverted hammer) was a pretty good trade, Price never reached where the stop loss at the top would have been. So it would have been successful.

The second Trade and maybe a little better( only because it had more confirmation)

It was a failed attempt to complete the second leg of the uptrend. (failed counter trend move)

Its kinda easier to see on a Min chart but it was a couple pip bull trap and on a 5 min in was a failed morning star.

So basically bar 1100 was a morning star,1105 (price touched the entry for the morning star), 1110 was an inside bar closing down.

So we know a few things
1. Bear line was broken (bulls showed power)
2. The leg down showed more buyers (morning star)
3. When the second set or new buyers entered they had to exit at a loss because their trades went the opposite way.
4. After the morning star failed to produce a new high old bulls exited.
5. New shorts (second set after the inverted hammer at 1045) added to their short positions.


So moral of the story both trades would have worked...but the more confirmation the better. Trading is the Best Guess scenarios.

But more confirmations means more volume and more chance of a successful trade.
  • #118
  • Apr 21, 2010 8:53pm Apr 21, 2010 8:53pm
Quoting Fuzzyzc
Ok one thing Tex. I dont know if i clearly defined it or not but Channel Lines for bear trend goes on the bottom (underneath price) and trend lines for bear markets go on top. So what you have drawn would be a trend line In the second post Right?
Hi Fuzzy ,That is correct --- wondering if this would have been a better entry since it failed the trendline but you explained it well. Really wasn't a reversal bar to short there. Take care,Tex
  • #119
  • Apr 21, 2010 10:38pm Apr 21, 2010 10:38pm
Quoting tex123
Hi Fuzzy ,That is correct --- wondering if this would have been a better entry since it failed the trendline but you explained it well. Really wasn't a reversal bar to short there. Take care,Tex
Yes it did (the inverted hammer) fail the trend line But remember there are always going to be Bulls waiting to buy the failed short from the top.

So following the old saying buy low sell high.

Bears shorted the trend line break and bulls wanted to try to buy it low so see if the shorts would get squeezed out (when and if the inverted hammer failed)

Today was actually very eventful.

There were A lot of trades today, 7+ Great 5 min bar trades the euro also trended very well

Ill just show a picture. Really fun day actually.

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  • #120
  • Apr 21, 2010 11:36pm Apr 21, 2010 11:36pm
Fuzzy i'm reffering to my second post not the first --maybe i didn't clarify myself--this is not a reversal hammer. You see it made a 4 touch of the trendline ---jumped up over(bulls) the trendline and come back down.If you go down further yes there was another false break of the trendline---and i think this what your reffering too the hammer.

A person would defenitely have to be on their toes to trade this on the 5min charts or look at a higher time frame chart to get some idea what is going on. I normally trade the higher time frames anyway but this good experinece and interesting concept.

Take care.Tex
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