Price Action Trading with Indicators! The Freebie System

Suits me fine Dave. Thanks.

It's too bad that this thread is stuck in the journals section. This is a very good methodology and many more would try it if it was in the trading strategies section.

Thanks for your post, very informative as always, however a question.

I can see the resistance line 1.44060 which formed 2am - 7am (GMT+1) and there were HLS at 1am and 3.05am. If trading normally and awake at those times the previous history would def have me thinking about the shorts between 2am & 7am GMT +1

However, once that 1.44060 was breached and pivot restested higher up at arrow 1, would you really have taken that failure/ first arrow considering the HLs below rising off session lows. I personally would have waited for the move up to show its hand and shorted if it produced LHs under the pivot. As it was we saw HHS and the pivot gave way after the retrace off the HL below but did come back below the pivot look for a failure and LH/block there to short. I would be looking for a short opportunity under the session high or around previous resistance levels under the pivot but there was no history at that time and in the next move it moved through the Pivot.

If following Dredds methof should we not be looking for a BIG3 above and there is none showing at the first arrow?

Yours confused and willing to learn?

ST

4 x crude +20 +31 +20 +56

2 x Brent +20 +54

2 x GJ -18.5 -18.5

2 x USDCAD +5 +5

Attached one of the Brent trades

Ok ST....

I will go through the analysis of the 5M EU chart. As you can see price action stays below the DPV for about 6-7 hours (purple rectangle) without crossing the DPV line. Price action finally breaks the DPV to the up side and we get a small pullback to the DPV line at point B (magenta arrow). We see what appears to be a price rejection with a blue candle and we go long on the open of the next candle. As soon as we get in price turns around and goes south (point A). If you are just looking at the 5M chart this certainly looks like a valid trade set up and entry and I would agree if all I looked at was the 5 M chart. Of course this is a loser and I'll show you why I wouldn't have taken this trade.

Ok, lets try it this way, take your 5 M chart and try to get as many candles in the view as possible. Your chart should look like this ( see my 2nd chart). On the left hand side of the chart we have a nice down move and we start to bottom out and price starts to rise at the begining of today. Now can you tell me the difference in that down wave verses the up wave that was formed today during the 6-7 hour period when price was going up???

Notice haw price is going up it a tight up,down.up,down pattern. What I know is it looks like a classic wave 4 after a sharp down move. You can see down momentum wave has nice long red candles and moved very fast. The up wave took a long time to develop and had alot of small candles. This gives me a clue that this wave is more than likely a corrective wave. That combined with the up.down, up down movement over a prolonged period of time tells me that I don't want to be taking trades in the long direction especially around pivot points. The way you can isolate 4th waves is draw a trend line on the lows and a trend line on the highs and you can see price typically follows those trend lines. What I wait for is a break of the trend line to enter a short position. In this case I get a break of the trend line and a pullback and retest of the DPV line and a very easy entry.

Study your charts 4th waves happen on all time frames, learn how to recognize them. You don't have to be an Elliott wave counter just need to learn to recognize these tight up down movements.

I think it was originally in trading strategies or systems but for reasons only known to the mods they, in their ultimate wisdom and much to the displeasure of Dredding, decided to move it into journals

Hi Paulus

question for you please, i read in the thread that once you enter the trade you don't alter you're tp or sl till one of them is hit and you dont use a trailing stop either.

So in the senario where lets say ur risk is 10 pips and your tp (which you've said is always the next pivot level) is 30 pips what would you do if price went just short of the 30 pip target and retraced from there all the way back towards your entry price?

do you close out at your entry price or do you wait and see if it goes back up and hits ur tp or goes further down and takes out ur sl?

thx

Just another view on the EU. Pull up a 4hr chart and mark the weekly highs and weekly lows. A high is a week were the week before is lower than the high and the week after is lower than the high and breaks the low of the previous week. I have marked all of the weekly highs and lows in this current up trend ( purple rectangles). I also placed the resistance lines (red horizontal lines) at obvious highs from each week below current price.

In an up trend I am looking for weekly lows and then when price starts to move up I look for the break above those weekly lows. That confirms that the trend has resumed and you can start to look for pullbacks to pivot levels and trades to the long side. This is called trading with the trend.

Now take a look at the last swing up (top of the chart). Last week we had a strong down move with momentum. Can you see the difference between last weeks pullback and all of the others in this up trend???

On Monday price went below last weeks low confirming last week as a weekly high. We are at a resistance level (red line) and we should see some type of pullback since last week was close to a 600 pip drop. What I will be looking for is price failures to the up side. Once I start to see that I will take trades at pivot points to the down side.

Ok guys...

Just to show you that everyone makes bad trades here is one that I took today during the Asian session. EU 5 M chart. We had price come up to the DPV line and reject once. Bounced a few pips lower and started to come right back at the DPV line. I thought I'd be cleaver and get a jump on the up move that I am anticipating and got in at the green line. Price went up a pip and then went down. There you have it, another rejection of the DPV line. There's a lesson learned here, even when you are anticipating a move make sure that price is on the right side of the DPV line before considering taking a trade. In this case I should be waiting for a break north of the DPV line and a retest before I consider going long again.

Result loss of 12 pips.

I'm starting to feel real lonely on this thread..lol.

Here is a daily chart. We had a massive move down and the last 2 days have been just hanging around not doing much of anything. I still anticipate a pullback to the upside. If we start to move up look for price to come up to at least the 38% fib, It may go higher but should not exceed the 76% for the down trend to remain intact. I would start to look for price rejections at pivot lines and if they are close to the fib levels it would make it even better. Once we start to see price rejections at pivot lines it's time to start shorting again. Now if we don't get much of a pullback and we break below the wicks of the past 2 days we'll more than likely move down to the second purple resistance level. If this happen it would signal a strong down trend developing and you can take short trades at the rejections of the pivot lines and have a high expectancy they will be winners.

Thanks for the update Dave. Its been difficult trading the EURUSD these last 2 days given the ranging you mentioned. Lets hope tomorrow brings some stronger moves and some easier trading using this excellent system.

Weird day but productive

EU +5%-5%-5%= long from 1.4365
AU +15%
GU +15%+7%-5%
UC +10% -5% ( was +11%) -5%

ROc = 27%

P

Another great post, cheers Ozzie

My trades today were as follows:-

Crude +20 +21 +20 +18 -14 +32

EU + 20

GU -20 -20

I'm only trading at microscopic pip values however this thread has truly given me both the knowledge & belief that I don't need to demo trade forever.

Thanks go to all past, present and future positive contributors

Charts attached

EU was closed out at +15%

ROC 42%

P

Hi Dave and thanks for your reply.

Will have a closer look tmw ... been hellishly busy with work so havent been around much and some kind of summer flu over the w/e

Hope to be back very soon.

ST

Paulus these are great results day in and day out. Nice use of the fib on your charts. Are you just using a standard pivot indicator? When you have time please post more charts.

Just took a long trade on the 5M EU chart. We had several rejects of the DPV line, and when I say rejects what I mean is we were unable to go lower than the DPV line. I got in on break of the lower red line (aqua vertical line). Good for 11 pips. Got our on the pullback after testing the white resistance line. This move was either going to break through the white line or get rejected. I wasn't sure what would happen but I was willing to risk a few pips to find out. I know in my earlier post I said the intermediate trend is down and we are looking for a pullback before resuming the down move. If you are experienced and know what you're doing you can trade in the long direction but if I were a newbie I'd be waiting for the pullback to complete and then start looking for rejections off of pivot lines to the short side.

I know S/R lines pivots etc are regarded as zones rather than definite lines. With this in mind on a 5m do you have a max range from such a line before you begin to worry about the significance of the line? or do you just gauge the PA and as long as its repetitively rejecting its a goer?
Cheers

Hi Iamfx...

Good question. If we actually zone out on the 5M EU chart you'll see that I took this trade off of the rejection of the white resistance line. Since we're using pivot points in this thread I referred to the closest pivot point below the current price. Again you want to make sure it's within a reasonable distance to the price action you are looking at.

Yes, S & R levels are zones and I would say that the width of the zone depends alot on the time frame you draw them on and what the size of the candles to the left side of the chart forming the zone. On daily charts you may get zone that are 50-100 pips on weekly charts they could be 200 pips. These zones are very subjective and everyone has a different way of drawing them. Some use wicks some don't. My advise is study your charts, draw lines where you think they should be and watch how price interacts with those lines when it gets near the zone. Using pivot lines does help in the fact that the indicator draws the lines for you and you don't have to do it using whatever methodology you come up with.

Hello,

this seems to be a straight forward way to trade...I just had a question as far as the higher tf trend if trading the M5 what time frame trend are you guys watching?

Looks like OzzieD is watching the daily anyone else watching different?

Thanks