Intraday Price Action Trading - 5 Minute Chart with Forex Alchemy

Hi all

This thread is dedicated to all I have learnt from my 8+ year Forex trading journey.

As the thread title mentions this is focused around short term trading on the 5 minute chart. I trade the EURSD, EURJPY and the GBPUSD, my trading style has fixed rules but is somewhat discretionary in nature. It is based around price action pattern recognition in combination with support and resistance and momentum.

Price Action
For price action I am looking for individual bars (pin, engulfing, inside) in combination with the surrounding candles and support and resistance (there has to be a reason for the price action). Price is always trying to tell us a story, it is about understanding what it is telling us and reacting in real-time.

Support and Resistance
Trend-lines, multiple highs/lows (supply and demand areas), fib retracement levels (50-61.8%), big round numbers (1.3000, 1.3300 etc)

Momentum
This is where more of the discretion comes in and is very much about reading what is happening right now, momentum is about the strength of the candles, volatility of current price, is it consistent, is it reliable, is the market behind the movement or just one big player, is price slowing down, does it have the momentum to drive further. The ability to read momentum comes with time.

Here is an example of a recent trade I took on GBPUSD

You can see the short term trend is down based on the moving averages, however price has tested the 1.5620 area 4 times and has failed to break through, this shows the sellers are not willing to take price lower. Then a nice pin rejection bar forms off that area, open and close at the top of the candle with a big wick on it. Enter on the close of the candle with a 5 pip stop and looking for price to run back up to the previous highs for a 10 pip gain.

Just finished my trading session. I only trade for 2.5 hours during the European open.

My maximum number of trades per session is 5, however I don't always take 5 trades, especially on sessions like I just had tonight (NZ time) when the market is dribbling along at snails pace.

When price action is like this you have no choice but to only take a few trades as there are limited opportunities when momentum is weak.

It is far better to bag 3 pips or (0.5 R) like I did today then try to be a hero and trade your way through a slow moving market. It is all about holding your presence and not allowing your mind to come in and take over, know there will be another opportunity to trade tomorrow and be happy for the profitable day (0.5R a day soon adds up!)

3 Trades on EURUSD today, could have bagged a few more pips on the second trade but price was acting erratic so felt best to sit take early profit.

Here is my five cents worth...
The price broke down, but came back a bit higher, so can see what it does now (in the green box)
Price making a cone at the end, may determine a breakout either way.
General overall starting to form a bowl shape reversal.
Thin horizontal blue lines are saying trying to establish higher platforms...
On a higher TF it might look like a reversal hammer or something. The formation probably broke a smaller trendline coming down, now reversing back up...

I do like formations though... favourite is a bowl on low TF's.

Nice observations johno77, great way to break it down and see the patterns that are forming. Focusing on the price patterns and how price is reacting as it forms those patterns is a powerful way to view the market.

Here is a trade I recently took on the EURUSD 16th Aug (5min chart)

Price is rolling over in a uniform nature and with the short term trend (moving averages), price has made a small bounce off the 50 EMA and also off a trend-line that has formed over the past 4 hours, as well as a low from several hours ago so support turning into resistance. (see bigger chart at bottom)



As you can see in the chart there is a doji candle with equal open and close, followed by a red small rejection candle, which when combined, signal that price is slowing its retrace up and might be looking for another leg down. Taking this into consideration with the fact that price is reacting off the area of resistance (trendline, previous low & 50 EMA) and in the direction of short term trend, it is a uniform pattern that makes for a high probability trade.

Entry after the close of the small red rejection candle and looking for at least 1:1 risk to reward as trading with the trend. Closed manually as price moved past 1:1. Result +8.9 pips + -0.7 commission = +8.2 pips or 1.43R

In this video we review the intra-day price action set-ups on the EURUSD 5 minute chart from the European session on 22 August 2013.

The session was volatile in nature due to several high impact financial data releases coming out of the Euro zone. However there were several high probability trading opportunities and a few higher risk propositions to consider.

During the video I discuss the purpose of price action, how we should be looking to structure the market for entry opportunities and how to recognise when price has gone too far for you to consider an entry.

Here is a nice price action based set-up from Friday 23 August EURUSD 5 minute chart

Price has made a triple bottom and is making higher highs plus the moving averages have rolled up.
Price makes a 50% fib retracement of the last move up then forms a small rejection candle followed by a smallish candle with a higher high and higher low. The stall is also off the previous highs as seen earlier back and off the 50EMA.

Entry long with 5 pip stop, looking for 2:1 as trading with the short term trend.

This trade had price action combined with support and resistance, with the short term trend and momentum.

Here is my latest scalping price action analysis.

During this video I will take you through the price action set-ups from the EURJPY 5 minute chart. We also look at a comparison between the EURUSD and GBPUSD and highlight the contrast in price action and the benefit of looking at multiple currency pairs during a session so you can take advantage and focus you energy on the pairs that are moving with the most purpose.

Here is a look at some price action on the EURYPY 2 minute chart, Thurs 29th Aug
Description below

Attached Image (click to enlarge)

One
A Small trendline is developing, lower highs and lower lows forming, moving averages have rolled over signalling short term momentum is changing. Price forms a small rejection candle off the moving averages and trendline, price has also reacted several times at this area in the last 15 candles. Entry on the close of this candle and stop above (approx 4 pip cost with commission). There is the opportunity to take 2R out of a trade like this.
Tips: When scalping the 2 minute chart your intuition comes into play as execution needs to be quick and efficient. Using a fixed stop loss of, for example 5-7 pips, for all trades allows for one-click trading, consistent lot size and risk per trade.
Two
Price forms a flat bottom with 4 attempts to break lower without success. Price then forms two inside doji candles in a row. Entry on the close of the second one, stop loss of 5 pips, 1:2 risk to reward achieved on the next candle.
Tip: Given the strength of the momentum drive back up you can look to hold onto the position with a wide take profit. Many times at the start of the session you can get in at the ground floor and ride the move for significant value so long as the momentum holds.
Three
Price is slowing down and reacting multiple times, price then breaks through this level and rejects back down, then forms another red rejection candle. Entry off either one of the two, stop loss 5 pips, price runs back down to the previous area of resistance from earlier on in the session and makes a 50% retracement of the move up. Potential for 1:2 risk to reward on this trade.
Four
Rejecting off the previous area of resistance and 50% retracement of the last move up, also off the 50 EMA and in the direction of the short term trend. Entry on close, 5 pip stop, 1:2 risk to reward potential.
Five
Price has tried to go higher multiple times but has failed and formed a trendline. Price rejects off the trendline with moving averages coming back together and closes well down the previous candle. Entry on the close, stop 5 pips, take profit potential 20 pips.
Six
Price drops back down to form a double bottom from earlier in the session and reacts strongly off this area. Entry on the close, stop 5 pips, 1:2 risk to reward possible.

Another video of some intraday price action analysis



My blog: http://www.forexalchemy.com

I am trading on spread from 0.0 pips, are you? Here is my broker: http://bit.ly/19MD0LH

Here is another intra-day price action analysis video I recently did.
I highlight the various aspects of structuring the market (5min chart) from a price action point of view and look at different trading opportunities, and what to look out for.



My blog: http://www.forexalchemy.com

The broker I use has spreads from 0.0 pips, low $200 deposit, micro lots, are regulated by ASIC, fast execution. Institutional pricing for all traders. Try a demo and see for yourself: http://bit.ly/19MD0LH

Here is a snapshot of 2 trading opportunities during the European session on the EURUSD 5 minute chart from the 3rd Sept. Video analysis below gives more in depth analysis to the price action taking place. Notice the cup forming...





My blog: http://www.forexalchemy.com

The broker I use has spread from 0.0 pips, low $200 deposit, micro lots, are regulated by ASIC, fast execution. Institutional pricing for all traders. Try a demo and see for yourself: http://bit.ly/19MD0LH

It was a counter trend session (short term trend based on the moving averages) during the European opening hours 5th Sept.

The EURUSD 5 minute chart was stagnant and formed a floor with the momentum candles being bullish with weak selling pressure to push price further south. There were only a few opportunities (but that's all we need). With this style of trading we need to be patient and its about getting in and getting out, only taking a handful of trades per day.

During this session you could have taken multiple trades with 0.5 R results so sometimes we need to read the low volatility and readjust our targets and expectations. No use sitting there waiting for price to make a massive breakout when we can clearly see that it is slow and unlikely.



My blog: http://www.forexalchemy.com

The broker I use has spread from 0.0 pips, low $200 deposit, micro lots, are regulated by ASIC, fast execution, cTrader. Institutional pricing for all traders. Try a demo and see for yourself.

Do you have TradeExplorer or Myfxbook to share? It doesn't even have to be live account. I just want to follow your trade history.

You are using cTrader in your chart pictures. cTrader can now link to Myfxbook:
cTrader – Welcome Aboard!
MyFxbook Integration

Hey mmaker. No I don't sorry, I don't trade on Metatrader. However I am in the process of setting up a MT4 account to start trading on (for mirror trading purposes) so I will get it onto the trade explorer so you can follow my progress. I will let you know when its live, should be next week.

Here are my live trades from today's session on the EURUSD 5 Min chart. 3 trades, 3 wins, 2.28 R (net 13 pips).

Here is the video analysis of price action to go with the image above




If you are scalping like this you must be trading on tight spread. Trading is a business so we must maximise profit and minimise costs, your broker fees can make a big difference to your trading profitability. I trade with average spread of 0.1 pips on the EURUSD. Click Here to try a demo and see for yourself.

To scalp or not to scalp? That is the question I will answer in this video...
Blog: http://www.forexalchemy.com


ECN Broker spreads from 0.0 pips

Trading Results 11 Sept EURUSD 5 min chart

1. EURUSD Buy: +5.6 pips + -0.7 commission = +4.9 pips
2. EURUSD Buy: -5.0 pips + -0.7 commission = -5.7 pips
3. EURUSD Buy: +12.6 pips + -0.7 commission = +11.9 pips

Total net result: +11.1 pips or +1.94 R

Subscribe to my blog (it's free) for more intra-day price action information: http://www.forexalchemy.com

True ECN Broker with spreads from 0.0 pips

Results From 12th Sept 2013

1. EURUSD Sell: +6.8 pips + -0.7 commission = +6.1 pips
2. EURUSD Sell: +8.5 pips + -0.7 commission = +7.8 pips
3. EURUSD Buy: +5.4 pips + -0.7 commission = +4.7 pips

Total net result: +18.6 pips or +3.26 R

Subscribe to my blog (it's free) for more performance updates and intra-day price action information: http://www.forexalchemy.com

Results Chart