Price Action, Pro, And Ichi Trading with 2ndskiesforex

Cool. Well he is still around. Although he seemed to be vacationing quite a bit in July...

He actually just posted a new Ichi video on Wave Theory which I have been watching and posting in the 2ndskies forum. Fascinating stuff. I thought I understood Ichi, but this stuff will blow your mind.

Keep up with the posts, lots of helpful pointers in here. If you have any questions or anything let us know.

And pins, that's part of our arsenal with PA, I love trading those.

Hello Dart,

Yep, will definitely start to add a wider variety of instruments using both price action and ichimoku so stay tuned.

Not sure why they won't let you attach a chart - strange but you can always use a free image hosting service, then link to it directly (one option).

Anyways, good to have you here on the thread.

Kind Regards,
Chris

It says "invalid file" when I try to upload....I don't have any problem over at BMT.

Looking forward to future discussions thanks

hmm, perhaps you need to convert it to jpg, but I never have any problems loading jpg images here.

hope this helps but tech support is not my specialty

kind regards
chris

GBPUSD
Now that the summer months are coming to an end and traders are coming back to the desks, it seems the foreplay of the recent consolidations is over and things are loosening up. First it was Silver to break the stalemate on Monday, Gold on Tuesday, and now the pound today, clearing a major hurdle and resistance that has held since mid-May.

The clearing of the resistance came via a strong breakout bar which closed near the top, suggesting little profit taking going into the close communicating more upside is likely. Although I wouldn't rule out a pullback towards the role reversal level, that hasn't seemed to be the theme as the prior breakout players (Gold/Silver) never looked back and all found higher prices. If this theme holds, the pound should be no exception.

Aggressive players can take longs around 1.5851 with stops below the 1.5750 area, targeting the big figure at 1.6000 and if continuation is in the air, 1.6054. More conservative players can wait for the pullback about 100pips back but the pound looks set for higher prices.



Global Market Commentary:
Starting the day under water, US indices recovered most of their lost ground as the FOMC hinted central bank easing is likely coming to an index near you. Obviously, this boosted stocks along with Gold, Silver and pretty much everything vs. the USD. This will likely boost Asian and European indices into the next sessions along with precious metals.

Speaking of which, Gold gained about $13 closing at $1656 while Silver added about $.40 to close at $29.84.

Tomorrow should be quite volatile with key levels broken but plenty of key announcements coming due.

Upcoming Economic Announcements:

CNY HSBC Flash Manufacturing PMI 02.30GMT22.30EST
EUR German Gross Domestic Product n.s.a. (YoY)06.00GMT02.00EST
EUR German Purchasing Manager Index Manufacturing07.30GMT03.30EST
EUR Euro-Zone Purchasing Manager Index Composite08.00GMT04.00EST
GBP BBA Loans for House Purchase 08.30GMT04.30EST
USD New Home Sales 14.00GMT10.00EST
NZD Balance (YTD) (New Zealand dollars) 22.45GMT18.45EST

Use Jing. If you are trying to download a snapshot from the platform then it may not recognize it.

I am glad I found this thread from KnuckleHead.

I am really interested in a good advanced Ichimoku course and found Chris 2nd Skies website but could not find any detailed reviews.

I am also very glad Chris even replies here because some of the reviews stated he was not very involved after the course but this thread is proving that wrong.

I also tried communicating with some other Ichi teachers, but they do not even have the decency to reply.

I think I have found a mentor and community that can further excel my knowledge.

Awesome work.

Hello Pieterjan,

Thank you for the kind words. I am not sure what reviews you saw where someone said I was not involved, but I am highly involved every day with my course members, making new videos almost on a monthly basis constantly taking the course and material to the next level.

But here is a link to where some traders and students just started putting reviews up and they are all favorable which you can see;
Chris Capre Reviews

Anyways, good to have you here as a part of the community. I take great pride in my work and my students so hopefully you will become one of them in the near future, but this thread can be a beginning.

BTW - I may be making a trip to SA in the next few months for a business project so if you are around and available, perhaps we can meet.

Kind Regards,
Chris

Thank you so much for the reply Chris, it is really appreciated.

I think i will be joining your group at the end of the month. It is always refreshing so see interaction like this. I can only imagine how you are on your own website and forums.

You really must let me know when and where you will be in SA. Would gladly take of time.

Regards

Hello Pieterjan,

Sounds good, would love to have you join the group and learn some new ichimoku material.

Once everything is finalized for my SA trip, I'll keep you apprised so hopefully we can meet up.

Kind Regards,
Chris

AUDUSD
I am going to comment on this pair from an Ichimoku and Price Action perspective. Ichimoku first.

Although the pair is above the Kumo and Kijun, it has been sandwiched below the Tenkan for 8 days now. By itself this would be suggestive of weakness. But add how the price action has related to the channel and its more suggestive.

Look how the price action has responded to the bottom of the channel. Only in the first (of the last 4) approaches did it stall at the bottom. But each time it was rising quite steadily, along with the tenkan. Now the tenkan has been holding price for 8 days capping the upside. Combine that with how today's selling pretty much erased 3 days of gains, only to be stopped by the channel bottom which is still in play.

Overall, the pair looks more likely to break the downside (of the channel) as it seems to be barely holding on at this point. Ichimoku traders can play an upside rejection towards the tenkan and yesterday's highs, or wait for a break below the Kijun. Price action traders can take buys off the 5 day lows just above 1.0400 with tight stops, or look to sell just above 1.0530 on intraday weakness.



Global Market Commentary:
Stocks globally pulled back as the glimmer of the soon to be Fed stimulus wore off quickly, along with the weak data coming out of China and Europe also souring the mood. It should be noted Frau Merkal and France's Hollandaise sauce just met with Samaras and told him no extra time or money is likely to be given to Greece (Oopah!)

China's HSBC Flash PMI came in under expectations, along with the German and EuroZone PMI coming in soft. On the other side of the pond, the Initial Jobless Claims also did not help for risk on instruments.

The DOW lost 115pts which was its biggest drop in over a month, while Gold rallied $32 on the close and Silver broke $30 to close at $30.56, gaining 9.4% in the last 4 days, its strongest jump in 10mos. while Gold had its largest 3 day rally in 2mos.

Upcoming Economic Announcements:

AUD Stevens testifies to House Economic Committee23.30GMT19.30EST
AUD Conference Board Leading Index 00.00GMT20.00EST
EUR Spanish Cabinet meets 08.00GMT04.00EST
GBP Gross Domestic Product (YoY) 08.30GMT04.30EST
EUR Greek Prime Minister Samaras/Merkel Talks 09.45GMT05.45EST
USD Durable Goods Orders 12.30GMT08.30EST

EURUSD
After bottoming on the year with an engulfing reversal bar, the pair has gained 4 of the last 5 weeks for the first time this year. The bulls were on parade all last week till they ran into the weekly 20ema before being rejected back 81pips from the highs. So far this year, the pair has closed all but 3 weeks above the 20ema so breaking and closing above it would be an interesting technical event.

However, I cannot imagine investors being excited about being long EUR vs. anything other than the IQD (Iraqi Dinar) as many inside Germany and other countries are preparing for a possible Grexit. The rejection from last week was decent enough to warrant intraday shorts at last weeks high and the 20ema. Beyond this, bears can look to short at 1.2650 which was the Jan swing lows, along with the weekly/pullback highs from June before a strong sell-off ensued. Bulls meanwhile can wait for a technical close above the weekly 20ema before getting long but if I had a preference, it would be short than long.



Dow
After gaining for 5 weeks straight, the US index produced its first weekly bear close, and did so in interesting fashion forming a bearish engulfing bar at a key mutli-year high which I talked about two weeks ago as being a great area to look for shorts. The index didn't disappoint as it sold off over 200+pts from this level which some of my price action students got in on.

Looking at the engulfing bar closer, the rejection to the downside is significant and actually is larger than the body itself, communicating there still are plenty of interested buyers in this market. I personally will be looking for weakness on the 4hr and 1hr charts as it approaches the yearly highs again for a possible price action reversal trigger off this level to get short with stops above the weekly high. If the bulls manage another weekly bull close and it communicates strength, then I will wait for additional signals before taking a direction, but I think there are short plays available here.



Gold
Now that the summer consolidation and foreplay is over, Gold has broken and closed above the key $1630 area which it has not done so since early May this year. It has also broken above the weekly Kijun which it has been below since March. The weekly bull close and breakout bar above the key consolidation area is impressive to say the least and I think the tie is broken on where the next leg is for the metal.

From an ichimoku perspective, what is interesting to note is two things;
1) How the Tenkan cradled the metal for the last 8 weeks which is common during an accumulation period before a big upside breakout.

2) How the Chikou Span during the entire sell off since last august never broke the price line lows to the downside - a common ichimoku formation during consolidation periods instead of reversals. The Chikou span is also close to clearing the upside of the price line above the Kumo.

Both of these points above are suggestive the metal should be underpinned and well supported to gain more ground medium and long term, especially if it clears the Kumo which it has not seen the topside of since early March this year.

I personally have been long since $1633 and have been adding on positions (2x last week) as I'm expecting more upside gains medium term. I will buy any pullbacks into the $1630/33 area to accumulate longs (barring an adverse Jackson Hole meeting this week) as I'm expecting a minimum upside target of $1700 medium term, possibly $1772 and $1804 and $1900 before year end.



Silver
After a long consolidation and price action accumulation period, Silver broke the stalemate also closing above a key resistance level at $28.61 which it has not closed above since early May this year. What is also impressive about this upside breakout is a) the strong close (only $.06 off the highs), b) that its the largest weekly open-close gain for the year, and c) the weekly close above the 20ema which has not happened since March this year, all strong bullish indications.

I think we will continue to see more volatility and upside gains for the shiny metal and am also long on the breakout. Intraday traders can look for longs around $30.22 whereas more conservative players can look to get long at key intraday support levels from last week, such as $29.50 and $28.67. Only a weekly close below $28 changes by medium term bullish bias, but I am both long paper and physical and see possible upside targets of $32.57, $35 and $37.15 before year end.

AUDUSD
Selling off 8 of the last 12 days, the Aussie has been hemmed in by the Tenkan since the 14th of this month which is quite unusual considering its been in a solid uptrend since the beginning of June. I commented about this last week on how I suggested a break below 1.0400 and the channel bottom (held in place since June) will likely break to the downside.

This happened yesterday and today for the first time, we have a daily break and close below the Kijun-Sen. This, combined with the tenkan pressure, along with the chikou span entering the price line are all short term bearish also suggesting the momentum is continuing to add to the downside.

Weak intraday rallies up to the daily tenkan can offer sell signals for day traders, while bulls will have to wait till 1.0330 (swing high Jul. 5th) or possibly a bounce off the kumo around 1.0254 before adding any longs as the short term downside pressure is in tact.



Global Market Commentary:
Volumes were below normal today with the UK holiday but stocks in Europe held while US indices were mostly flat with investors believing likely stimulus is on the cards care of your favorite CBs who love nothing better than propping up failing and zombie banks (i.e. Dexia requesting their third which they 'promise' will be their last).

Oil was a little more volatile with hurricane Isaac heading into the Gulf of Mexico.

The main thing on deck is this Friday's Jackson Hole meeting which investors globally will have their eyes on. Gold shed about $7 falling towards $1663 losing ground for the 2nd time in 9 days while Silver formed its first losing day in 6.

Upcoming Economic Announcements:

CNY Leading Index 00.00GMT20.00EST
AUD HIA New Home Sales (MoM) 01.00GMT21.00EST
EUR German GfK Consumer Confidence Survey06.00GMT02.00EST
USD Consumer Confidence 14.00GMT10.00EST

GBPUSD
After breaking out of the summer range, the cable formed a pin bar rejection at the next resistance level and has since sold off for two days.

Today it has reached the breakout level and rejected nicely off of it, confirming it as a role reversal level. It did so forming an outside bar pattern in the process, along with a decent rejection to the downside. If the breakout is to hold, then this level should as well. Luckily there was a decent rejection to the downside today, along with a rejection to the upside so sellers are still present.

Thus, bulls can look for pullbacks into this level around 1.5750 for longs with tight stops targeting 1.5835 and possibly another attack on 1.5900. Bears can meanwhile look to sell rejections at this latter level as long as the price action shows weakness leading into it.



Global Market Commentary:
With the Jackson Hole speech coming this Friday, volumes and volatility levels are coming down as position paring occurs before the big day and announcement. The Euro gained vs. the Greenback as there is more hopium going around the ECB will save everyone and continue to buy bonds from ailing countries...only to in turn take the revenue back from those countries it bought said bonds from (yes - its a ponzi scheme), just somehow legal.

Meanwhile, Spain continued to highlight its troubles as bank outflows outweighed deposits by 5% on balance. Catalonia meanwhile requested €5B available in rescue funds without allowing conditions (perhaps beggars can be choosers).

Although one has to wonder how much of this potential new stimulus from the FED is priced in, the bottom line is Bank CEOs/global investors are waiting for the lifeline and prop to the stock markets the FED does so well.

Notably, Gold sold off about $6.5 ahead of the Bernanke speech while the DOW only lost about 22pts.

Upcoming Economic Announcements:

EUR German Consumer Price Index (YoY) 12.00GMT08.00EST
USD Gross Domestic Product (Annualized) 12.30GMT08.30EST
USD Core Personal Consumption Expenditure (QoQ)12.30GMT08.30EST
USD Pending Home Sales (YoY) 14.00GMT10.00EST
USD Fed Releases Beige Book Economic Survey 18.00GMT14.00EST

This is a new post I've written to help you with identifying high probability breakouts using 3 simple price action clues.

Breakouts are some of the tougher environments for traders, and understandably so because they represent potential, but often fail.

I've already written an article for trading breakouts Post-Breakout, but what about the Pre-Breakout moments where you have to make that key decision to trade it or not?
How do you identify them and what are the key elements that precede strong breakouts?

This is the key point of this article - to give you 3 tips for identifying a soon to be strong breakout so you don't get trapped in a false breakout.

I will go over the three elements you will want to find before considering a breakout, then briefly highlight what is behind them from an order flow perspective. By learning to spot these clues, you can position yourself to trade higher probability breakouts and capture a larger portion of the upcoming move.

1) Well Defined Support/Resistance Level
The first pre-requisite to identifying a healthy pre-breakout situation is having a clearly defined barrier in the form of a support or resistance level. The classic case is when you have a trend in place (lets say uptrend) and then the price action runs into resistance at a key level.

Ideally, you want there to be at least two touches on this level before defining it. The more horizontal and neater this level is - the better. But it should be noted, this is just a pre-requisite and generally by itself not enough to identify a healthy breakout setup. The reason for the two touches is to identify a sticking point where players are parked and what level they are defending that the (bulls in this case) are unable to penetrate.

By finding both parties present, we have the environmental potential from an order flow perspective to create a healthy breakout. In this example, the sellers are clearly holding a price they want to defend and have stops just above it. By them staking their defense in a clear location, it communicates where their orders and stops are likely parked. It is tripping those stops, along with bringing in new buyers that is the goal of the bulls.

Below is an example of a clearly defined resistance level after a downtrend and consolidation period, communicating there are bears clearly defending a level.

Image 1.1


2) Pre-Breakout Pressure or Tension (Squeeze)
The second element you want present prior to a breakout is a pre-breakout pressure or tension that manifests as a squeeze. This pre-breakout tension is highly important because it creates a friction and pressure upon the defenders (in this case the bears). As the bears realize their rejections off a key level are getting smaller, while the bulls continue to gain more upside and territory, it causes a friction in their minds that forces them to make a critical decision (either stay in and defend, or exit the market).

As the room gets smaller and smaller for them to work with as the bulls squeeze the bears out, sellers defending a level will often exit early, leaving the defense to those who are not realizing the game is up. This further weakens the defenses at these levels until very few are left to carry the burden.

You can easily identify a price action squeeze and this pre-breakout pressure, or tension, by the price action forming higher lows in attacking a resistance level, or lower highs when attacking a support level. This is a combination of the current bulls willing to buy up the instrument at a worse price, along with new bulls wanting to get long before the breakout. A good example is presented in the same chart which I will zoom in on to highlight.

Image 1.2


3) 20EMA Carry
Another key element you will find prior to breakouts is the 20ema begins to carry price leading up to the key resistance or support level that is being defended. This is not so much that traders are placing orders there prior to the breakout (although many will), but also a visual representation of how the squeeze is taking place.

Just looking at the chart above, we can see in the beginning, after the first rejection off the key resistance level, price penetrated nicely below the 20ema. But as we get closer and closer towards the right where the squeeze is taking place, you see the market barely go below it for more than a single candle before resurfacing.

Also, you will notice how the first few times the rejection approaches the 20ema, it breaks through after one candle. But towards the end many candles start to float above it where some traders are entering in anticipation of the breakout.

Another really good example was one I traded and blogged about ahead of time with the AUD/USD on the 1hr time frame. The pair had been trending up for 110 pips over two days, but ran into a key resistance level that it got stuck on at 1.0081 (image below).

Image 1.3


Using the example above, notice how the 20ema in the middle of the chart is penetrated about 20pips, but then as we get closer and closer to the resistance level and the squeeze begins to happen, notice how the 20ema begins to carry the price action, and the penetrations get smaller and smaller?

This is a combination of very few sellers defending the level, while the bulls in anticipation of a breakout (realizing they have control) are likely entering new positions to get in ahead of the upcoming breakout (I was one such trader). Eventually the pre-breakout pressure and tension became too intense and the bears gave up when the bulls made their push, tripping stops and creating a large breakout bar with a strong close.

In Conclusion
Breakouts can offer highly profitable opportunities when you can position yourself well. But to do this, you must be able to identify highly probable breakouts with these 3 key elements which are;
1) Well Defined Support/Resistance Level
2) Pre-Breakout Pressure/Tension (Squeeze)
3) 20EMA Carry

If you can learn to spot these key elements prior to a breakout, along with reading various other price action clues, you will find yourself entering in higher probability breakouts, increasing your success and profitability. You will also find yourself not getting trapped by false breakouts which can wreak havoc on your account and confidence in trading them. Thus it is critical to read and identify the key elements prior to a breakout.

Silver
As the snoozefest continues with investors pulling out prior to the Jackson Hole meeting this Friday, breakouts are an endangered species till then while small ranges are dominating. Tis no surprise that an daily inside bar formed on almost everything, but the one that is more notable is the one on Silver.

Why?

Well two days ago the pair formed a bearish pin bar after a 5 day climb. Since then, it has formed a non-descript bull bar with today's being a bearish inside bar. Normally you do not have two bars back to back like this after a notable bearish pin bar. Either a test on the pin bars high manifests, or a breakdown, but not such a straight range.

I suspect this is part due to precious metals traders wanting to wait till the Bernanke speech, but the fact the metal is hovering there suggests some underpinning. If Bernanke does not announce any more easing, then expect a strong sell-off in silver and gold, but if he does, then expect the pin bar high to be taken out within hours after the speech. Aggressive intraday players can take longs just above $30.50 with ultra tight stops, while intraday bears can short just a few cents shy of $31 (tight stops as well).



Global Market Commentary:
Volumes were ultra low today with markets mostly trotting in place with Gold being one of the more active instruments shedding $11 dropping to $1658 to close the day.

There is some speculation the ECB will do some sort of easing since he has communicated he will not be at the Jackson Hole meeting, possibly to prepare for such easing to be announced on its Sept. 6th meeting.

Euro German GDP came in around expectations as well as US GDP hitting the main predictions as well.

Upcoming Economic Announcements:

NZD NBNZ Business Confidence 01.00GMT21.00EST
EUR German Unemployment Change 07.55GMT03.55EST
GBP Mortgage Approvals 08.30GMT04.30EST
EUR Euro-Zone Consumer Confidence 09.00GMT05.00EST
USD Personal Consumption Expenditure Core (YoY)12.30GMT08.30EST

Hi Chris,
I found your tips are really helpful. I would like to have your comments on the chart below where I think the first line demonstrate your post-breakout rules while the later shows exactly your 3 tips on pre-breakout?

Hello Vnfx,

Am glad you are finding this helpful.

Yes, the example below of silver is a textbook example of it and what I used to buy it as well as I got long just above the breakout.

But yes, this is a very good read or example of the 3 points you will want to see in a breakout - so well done!

Kind Regards,
Chris

With all eyes on Bernanke and the Jackson Hole speech tomorrow, I do not think its prudent to be giving any trade recommendations (or taking any new positions) till after the announcement with most traders/investors on the sidelines

Thus, I wanted to do was share an email exchange I had with one of my students which I thought would be really helpful for those struggling with the learning/trading process. Many traders either now or in the past, have gone through a similar experience with many never really getting past this stage. Hence, I think you will find this quite informative and possibly reflective of your experience.

The Student (we'll call him James):

Hi Chris,

I guess my frustrations are cause maybe I am being impatient and doubtful.

After sending the email last night about being frustrated, I jumped on FXstreet and watched one of your Price Action Webinars, and actually understood much more on the charts as I realised.

I was expecting after two weeks of study, I would be able to read charts a lot better than I can at the moment.

However, after watching the webinar last night, I can see that your education is really starting to sink in as I was able to see a lot more setups than ever before, and interpret the price action much better than anticipated.

My Response:

Hello James,

This might be one of the more self-reflective insights from a student going through the learning process. It's easy to be impatient and doubtful during the early stages.

This market is sooooo seductive, with all the money, movement, flashing lights and potential to make a lot of money in a short period of time. It's like being single for months on end, and being in the presence of really attractive women who are all smiling at you, but won't talk to you.

It can be intoxicating, but also unnerving when the results don't materialize in us winning every trade and becoming rich overnight.

This actually can be intensified if one's current financial situation is not stellar by any means. This only adds to the pressure of wanting to learn and become successful immediately. Another thing which can amplify this impatience is wanting to change your lifestyle for not really liking/enjoying your current occupation (not many do).

What is also great about your response is your impatience stemmed from the thought not everything was turning into matrix code like it did for Neo when he awakened. However, when you watched the webinars, you realized you understood more in the price action than you had thought.

This is a really good sign and is a reflection (or feedback loop) that you are learning more because you are seeing more in the charts than you did before. This is the most important sign to have in the learning process because this signifies you are moving in the right direction.

Keep at it and eventually, that will translate into more wins than losses, along with your profits starting to build.

As long as you don't believe the impatience and doubt as being actually representative of you (and your learning process), you'll keep moving in the right direction.

Eventually, with enough effort, patience and practice - the matrix code will start to appear :-)

I hope this helps.

All the best.
~Chris

Other Related Articles:
Trading Rule #1 - Know Thyself
5 Mantras for the Developing Forex Trader
4 Keys to Improving Your Learning Process

Thanks very much Chris for your quick reply. So, to my understand, in case of the above 3 key elements are in place then you will enter as soon as the next candle close above the S/R in stead of waiting for pull-back / re-test the S/R after break-out?
Sorry for my stupid question.