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Where can I learn more about Price Action like those in James16 charts? 9 replies

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james16 Chart Thread

  • #124,461
  • Apr 4, 2013 8:23pm Apr 4, 2013 8:23pm
Jarroo updating the terminology list, seems to have generated a lot of interest in the SFP.

I think it is important to remember that while the SFP can be traded very effectively as a method by itself, I think most people in this thread use it as another confluence tool in their toolbox.

Great that it generated interest in the liquidity that the PA shows us so, even though the wiz does not like to trade PA at these areas because the SL becomes too large. However PA and SFP are in fact one and the same thing. How many times have we seen the seniors dismiss a PB or BEOB because the close, did not close below or above a certain area? Just another part of the puzzle to put in place.
Just thought, I would mention this in case someone gets steered off track. All roads lead to Rome, as they say.
  • #124,462
  • Apr 4, 2013 8:44pm Apr 4, 2013 8:44pm
Quoting iuliu00
Hey Mike, Can I say we have the same story here? USDHUF H4 Thank you! {image}
Fantastic Iuliu I took a similar style trade on the aud/chf today with a few other people

That one I would be looking to enter on a close though because of the larger wick to the downside but still the strong close under resistance


Nice!
Mike
  • #124,463
  • Apr 4, 2013 8:54pm Apr 4, 2013 8:54pm
Quoting ghous
Hey Ping, That's just a swing low, which makes up only part of the SFP story. The other part is made up from the action where price tries and fails to penetrate the LLS (in case of a swing low) or the HHR (in case of a swing high). The chart below should clear things up, g. {image}
HI G, Thanks for the reply. but still trying to understands the SFP, can you correct me on this one also?
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  • #124,464
  • Apr 4, 2013 9:28pm Apr 4, 2013 9:28pm
Quoting mbqb11
Hey Yehuda How are ya bud? I would like to see price fall deeper down to test the lows of the support Smaller weaker closing pin so be careful with these , I pass on these Best Mike {image}
yo mike. how goes it - had a magic hat #9 at dinner last night and thought of my favorite trader/teacher/NYYankee fan. I looked at the EURUSD closely but passed mostly due to the BRN. I thought EURCAD looked like a better story to me, with the test of the BRN and the huge BUOB engulfing the large range. I put in a a market order with a hard TP near the BEOB, previous bar lows. Interested in your opinion on this pair.


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  • #124,465
  • Edited 10:18pm Apr 4, 2013 9:51pm | Edited 10:18pm
HI G, Thanks for the reply. but still trying to understands the SFP, can you correct me on this one also? [/quote]

Just in case Ghous is busy, thought I would explain it a little.
Actually, I am still getting to grips with it myself and this also helps me get a handle on it.


No, that is not the SFP.
You need to find them on more recent areas at a significant swing low.
Doesn't have to be the size of the one in my example though.

Hope this helps

NB: I am sure Mike is getting a little nervous about all this interest in the SFP.
People should really get PA down before really going into this aspect of swing points as, this is more like touch trading and this thread is really about PA. That said, it explains the the order flow of the PA we trade and should be thought of primarily like that.



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  • #124,466
  • Apr 4, 2013 10:14pm Apr 4, 2013 10:14pm
Quoting vickym
OK. So in normal conditions when the markets are not too much news driven, how do you validate if the trend will continue or it will reverse. Candle close above HHR and retest?
A tough question to answer in general terms really. Its not that the close above an HHR is a must. It really depends on the ongoing story. In a post earlier here I mentioned a chart where thinking long is really the way to go, give all that consolidation and the nice space above. Other times specially when you have this single swing points I am almost always on the lookout for a reversal as opposed to a breakout. Simply because it makes more sense to me to get on a move easing out of a prolonged consolidation as opposed to jump a running train as price seems to whizz past a prior major swing point. Its not uncommon to actually see this big strong close above prior swing points (i.e definitely a close above the HHR) and price still reversing on it big time.

I mentioned in a post here a little while ago, that price accelerating into a major level isn't always, depending on the story, indicative of momentum reminiscent of a breakout.

g.
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  • #124,467
  • Apr 4, 2013 10:18pm Apr 4, 2013 10:18pm
Hmm, I remember Ghous telling me a long time ago, to watch out for bars with long tails, just hanging in space, the SFP is probably the reason for this. Funny how, one more tool seems to not only fit in the picture but, somehow make the picture more complete.
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  • #124,468
  • Apr 4, 2013 10:33pm Apr 4, 2013 10:33pm
Quoting Pinbar
HI G, Thanks for the reply. but still trying to understands the SFP, can you correct me on this one also?
Just in case Ghous is busy, thought I would explain it a little. Actually, I am still getting to grips with it myself and this also helps me get a handle on it. No, that is not the SFP. You need to find them on more recent areas at a significant swing low. Doesn't have to be the size of the one in my example though. Hope this helps NB: I am sure Mike is getting a little nervous about all this interest in the SFP. People should really get PA down before really going into this aspect of swing points as, this is more like touch trading and this thread is really about PA. That said, it explains the the order flow of the PA we trade and should be thought of primarily like that. {image}
Quoting ping-ping
{image}
That is precisely I normally don't like to talk too much about my trading methodology here,

SFPs have got to be a pretty advanced concept out there to kill you if you don't have a good grasp on the basics. Its all about the story always, but building a story around pin bars is so much more easier than SFPs as they can be very very tricky.

If you must attend to your interest in SFPs demo DEMO and DEMOOO!! If my advice counts at all, I wouldn't suggest anyone who hasn't spent at least a year or so with the basics only to try and attempt the SFP stunt. They are tricky to take and even more trickier to manage. Yes they have there merits too but you've got to be eligible first in terms of experience with the basic market dynamics.

g.
I believe . . .
  • #124,469
  • Apr 4, 2013 10:45pm Apr 4, 2013 10:45pm
Quoting ping-ping
HI G, Thanks for the reply. but still trying to understands the SFP, can you correct me on this one also? {image}
Hey Ping,

that's an SFP oright, and I can see some implicit divergence building up too however,

notice how its heading straight back into a consolidation box and a very close by FTA. These are among the trickier setups as opposed to the no brainers.

I'll be watching this and hopefully it will serve as a good example through which I can explain to you guys why managing SFP trades can be very tricky and not as straightforward as your A+ pin bars.

cheers.

g.
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  • #124,470
  • Apr 4, 2013 11:16pm Apr 4, 2013 11:16pm
Quoting ghous
Hey Ping, that's an SFP oright, and I can see some implicit divergence building up too however, notice how its heading straight back into a consolidation box and a very close by FTA. These are among the trickier setups as opposed to the no brainers. I'll be watching this and hopefully it will serve as a good example through which I can explain to you guys why managing SFP trades can be very tricky and not as straightforward as your A+ pin bars. cheers. g. {image}

Ooops Sorry Ping Ping.

Ghous says it is an SFP although, I said it wasn't.

What I meant is, it was not a recent one.

If you get what I mean.
  • #124,471
  • Apr 5, 2013 12:13am Apr 5, 2013 12:13am
Quoting ghous
Hey Ping, that's an SFP oright, and I can see some implicit divergence building up too however, notice how its heading straight back into a consolidation box and a very close by FTA. These are among the trickier setups as opposed to the no brainers. I'll be watching this and hopefully it will serve as a good example through which I can explain to you guys why managing SFP trades can be very tricky and not as straightforward as your A+ pin bars. cheers. g. {image}
Hi G, I watch this closely also. Many thanks for the response. entrance Maybe after the NFP news (hopefully it's a good for US so entry point would be around 1540 maybe)

Quoting Pinbar
Ooops Sorry Ping Ping. Ghous says it is an SFP although, I said it wasn't. What I meant is, it was not a recent one. If you get what I mean.
No worry steve, still you are one of the greatest teacher in this james16 public forum.
  • #124,472
  • Apr 5, 2013 1:31am Apr 5, 2013 1:31am
Quoting ping-ping
Hi G, I watch this closely also. Many thanks for the response. entrance Maybe after the NFP news (hopefully it's a good for US so entry point would be around 1540 maybe) No worry steve, still you are one of the greatest teacher in this james16 public forum.
Entrance? Heck no! lol

I said I'll be watching this one, not trading it.

Taking a trade straight back into a close by FTA and a consolidation box, on an NFP Friday - No thank you. lol

What I meant was, that since this is one of the tricky ones, its unfolding would enable us to use it as a case study which should help us conclude why its so important to be very very picky with these should you decide to trade them (on demo first of course). Please understand this is a bad trade setup, but one nevertheless though.

Its instinctive to want get carried away and start seeing them all over the place connecting any bar wick with any swing point to make up a trade setup. This is still a very legitimate extension of the James16 basics and there is no point in delving into it if you're still trying to get your head around the basics. In all honesty, if you still find yourself learning to draw PPZs and anticipate their strength, if you still sometimes miss the bigger picture or have difficulty making it out, PLEASE PLEASE DON'T GET INTO THIS STUFF.

Geez, Mike's gonna be cringing at this and probably mad at me.

g.
I believe . . .
  • #124,473
  • Apr 5, 2013 2:08am Apr 5, 2013 2:08am
Quoting ghous
Entrance? Heck no! lol I said I'll be watching this one, not trading it. Taking a trade straight back into a close by FTA and a consolidation box, on an NFP Friday - No thank you. lol What I meant was, that since this is one of the tricky ones, its unfolding would enable us to use it as a case study which should help us conclude why its so important to be very very picky with these should you decide to trade them (on demo first of course). Please understand this is a bad trade setup, but one nevertheless though. Its instinctive to want get carried...
Okay g, still to need learn more here. But my trade is getting better each day on forex pairs. thanks for the lesson.
  • #124,474
  • Apr 5, 2013 2:30am Apr 5, 2013 2:30am
Reiterating from my last post:

Its instinctive to want get carried away and start seeing them all over the place connecting any bar wick with any swing point to make up a trade setup. This is still a very legitimate extension of the James16 basics and there is no point in delving into it if you're still trying to get your head around the basics. In all honesty, if you still find yourself learning to draw PPZs and anticipate their strength, if you still sometimes miss the bigger picture or have difficulty making it out, PLEASE PLEASE DON'T GET INTO THIS STUFF.

Here is an example of an easy pass that might actually trap you if you aren't trained to look at things holistically and are glued too much to bar to bar action considering fake outs of every minor major swing point you see.

The first chart shows the setup and the others show different perspectives of the bigger picture each of which is contradicting a short bias.

Its always about the story guys.

g.
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  • #124,475
  • Apr 5, 2013 3:38am Apr 5, 2013 3:38am
Quoting ghous
Hey Ping, that's an SFP oright, and I can see some implicit divergence building up too however, notice how its heading straight back into a consolidation box and a very close by FTA. These are among the trickier setups as opposed to the no brainers. I'll be watching this and hopefully it will serve as a good example through which I can explain to you guys why managing SFP trades can be very tricky and not as straightforward as your A+ pin bars. cheers. g. {image}
Hi, What does the implicit part of implicit divergence mean> Thanks,
  • #124,476
  • Apr 5, 2013 4:56am Apr 5, 2013 4:56am
Isn't SFP method and Jarroo's method going to contradict in many cases?I don't have a chart to give an example, but imagine the following case:

We have a major swing and price approaches those high levels again.Price goes past the previous swing high but closes back below, thus creating an SFP setup giving us a short opportunity.However price close above the previous HCR level as well, which makes us (if we follow Jarroo's method) look for a long position.

I don't know if you can understand this without a specific chart.In a case like this what should be our approach?
  • #124,477
  • Apr 5, 2013 5:02am Apr 5, 2013 5:02am
Quoting ping-ping
Hi G, I watch this closely also. Many thanks for the response. entrance Maybe after the NFP news (hopefully it's a good for US so entry point would be around 1540 maybe) No worry steve, still you are one of the greatest teacher in this james16 public forum.

I am just a newbie also, especially at the SFP.

Thanks for letting me off the hook.

Unless there is a lot of space, I feel the SFP is just like Jarroo's HCR & LCS and the more recent levels are more important.

Here is one I am watching the SFP level and the HCR level.
A weekly close below will be interesting.
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  • #124,478
  • Apr 5, 2013 5:18am Apr 5, 2013 5:18am
Quoting jaypatel33
Hi, What does the implicit part of implicit divergence mean> Thanks,
hey J,

I use the term implicit divergence to spot trend weakness directly from the chart. Price seems to be headed in the direction of the current movement but gets consistently beaten by prior bar lows (in case of a downtrend and bullish implicit divergence) and highs (in case of an uptrend and bearish implicit divergence).

It simply translates into the possibility of the current move loosing steam.

Also just like with our regular divergence it only means a significant bit to me at critical locations, such as when price is moving into a long term PPZ or a round number or looking to approach a prior major swing point. I also use it as another tool to gauge momentum in the moves I am in i.e for trade management purposes.

Here's a quick illustration of the concept.

(You may also want to refer to a post I made earlier where I talked about this concept here)

Charts guide:

Chart 1 ) shows that we have no regular macd / oscillator divergence

Chart 2) shows, a bar by bar breakup of the action at the former swing low, that price is supposedly trickling down under a major swing low, but is implicitly diverging because every major "knee jerk" reaction displayed by a longish lower wick on the bar is being sustained and price isn't being able to close under the lows eventually resulting in a bullish burst. Importantly, in such situations it is not uncommon for former support (the blue horizontal line i.e the LLS) to NOT turn into resistance and hold price up. Coupled with the story you can make out that price not showing interest in breaking out of a swing low should logically result in an up move.

cheers.

g.
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  • #124,479
  • Apr 5, 2013 5:28am Apr 5, 2013 5:28am
Quoting ghous
hey J, I use the term implicit divergence to spot trend weakness directly from the chart. Price seems to be headed in the direction of the current movement but gets consistently beaten by prior bar lows (in case of a downtrend and bullish implicit divergence) and highs (in case of an uptrend and bearish implicit divergence). It simply translates into the possibility of the current move loosing steam. Also just like with our regular divergence it only means a significant bit to me at critical locations, such as when price is moving into a long term...
We can now go back to Gold and see how price is implicitly diverging there.

g.
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  • #124,480
  • Apr 5, 2013 6:01am Apr 5, 2013 6:01am
Quoting dervel
Isn't SFP method and Jarroo's method going to contradict in many cases?I don't have a chart to give an example, but imagine the following case: We have a major swing and price approaches those high levels again.Price goes past the previous swing high but closes back below, thus creating an SFP setup giving us a short opportunity.However price close above the previous HCR level as well, which makes us (if we follow Jarroo's method) look for a long position. I don't know if you can understand this without a specific chart.In a case like this what...
That is a great question Dervel!

I don't trade Jarroo's PBT method so I am always on the lookout for price reversing at swing points via SFPs rather than break out of them. When I started off experimenting with SFPs I was actually trading the Jarroo method and so trading SFPs came with an added condition that price must also close under the HCR (or above the LCS) in addition to closing within the high (or low).

Over time as my interest in SFPs grew and I moved on to more and more SFP trades and experimentation I naturally let go off the jarroo method to avoid over trading. Later on I realized SFP setups were doing fine even without the inclusion of the condition pertaining to HCR and LCS. As it is I for one am always looking to simplify things as opposed to add a lot into the pie "that works" and then end up with something that tastes like everything but a pie.

The fact that I don't use them has nothing to do with how good or bad HCR/LCS levels really are. Being a jarroo follower myself I wouldn't doubt for a single second that HCR/LCS levels work, its just that for simplicity purposes I stripped them off my method and doing this didn't damage the results in any way.

At the end of the day HCR/LCS, highs/lows, round numbers, MAs, Fibs - all really constitute bits and pieces of the real picture and its up to you how you want to combine them, as long as the arrangement is logical.

So given that I am not fully equipped to handle your question Dervel, as I don't trade both strategies, I am going to give it a shot anyways...


************------------************



On one hand we have the SFP method which is eagerly looking to give a reversal trade off of a swing point, and on the other hand we have a similar method that propagates taking a break of that swing point once price breaks through and closes beyond.

As I see it, every swing point isn't an equal candidate for either strategies. There are certain stories where price breaking out makes more sense than faking them. Other times taking a break can be risky.

For example look at the first chart. Price seems to be poking out of a really long term wedge, yet just at this point it presents an SFP. Looking at the hugely bullish story I know its an easy pass for me. I also know Jarroo is eagerly looking for a PBT&CA and I am only smiling because I know its all too bullish. Notice how the bar next to the SFP tries to make its way down but its caught up in traffic and eventually holds up at the HCR level.

That said there are of course times when swing points are good for either strategy. Lets look at the same chart, a little further back into the consolidation...(second chart). Price closes above the HCR and still manages to print an SFP. More like the situation you're talking about. Notice how despite PBT&CA price isn't exactly taking off like you would expect in a true breakout. That would ring some bells for me for sure.

I have made my point and I am not sure if this clarifies your concerns. I am sure Jarroo would get to this a lot better than I did.

g.
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