Simple, Powerful and Effective Price Action Trading Strategies

Dear Forextik,

The price movement gives the opportunity. The next action is for traders to define their entry. I felt that several options come to my mind. option 1 is to enter around 1.056, and Stop Loss at 1.059. option 2 is what you suggested. I have not yet determined the Target Profit. I favor big trend and follow market. I prepare to lose 30 - 50 pips to gain downswing.

yep that is what i try to do...but it is not so easy to catch the real reverse....they happen just twice in a month....it depends....even if the price seems to stop on a dyn o static resistance or support....there may be a breakout....

by the way do you go to break even with stop loss? and if yes after how many pips?

and last question, for those that are indicator expert....which indi is the one that create a yellow shadow in inside bar???

cheers and thanks!

We basically use the candlestick signals as the framework for our trades, so stop losses are generally placed at either the low, or the high of the candle because that full defines the risk of the setup. Reversal signals are where we generally take advantage of market retracements to get a better entry price and breakout trades generally trigger when price breaches the high or the low of the candle.

USDCAD is a very hard pair to trade because it 'spikes' too much and retraces heavily. With USDCAD I tend to be generous with my stop loss to account for this abnormal movement, but the setup did fail earlier on this weak as we got stopped out by one of those spikes.


We are strong believers of lining up candlestick reversal signals with the market conditions, the candlesticks can't qualify as a signal on their own, you need to build value into the trade before pulling the trigger. Things like testing of support and resistance and if any breakout traps occurred in the formation of the signal etc.

Speaking of breakout traps, we're watching closely for one on the GBPUSD now the range top is being tested...

Just looking at the GBPUSD today where the market is now testing it's range top. This is a prime area for a bullish breakout trap to occur, any attempt here to break higher that fails would be considered a bearish signal. Watch to see how this New York candle closes on the daily chart, or watch 4 hour chart for candles that communicate an obvious breakout trap to the high side has occurred.

If a breakout does occur, it's important to remember not to chase price but to wait for the market to maintain the higher prices above the range and confirm the old range top as a support level via a bullish price action signal.

so, if tonight this candle will close under the resistance, leaving a good tail....this may may a good signal to enter a trade, posing a pending order under the candle.....

That was the idea, but the market closed above the level, even though there was a small tail it was not strong enough to signal a breakout trap.

Today on the AUDCHF daily chart, a similar situation...

After a strong bearish rejection candle trade that we discussed in the war room ‘chart of the day’ commentary, the market sold off aggressively into lower prices. Now would be a good time for those in the AUDCHF short position to consider taking profits.

Price is now testing the ‘floor’ on the chart here as it moves into a major support level on the daily chart. We can see by zooming out how this level has acted as strong support before. We are waiting to see how price is going to react with this level.

If the market breaks through, we don’t want to chase price and sell into the breakout because this is a high-risk area for a market breakout trap to occur. If a breakout trap occurs, meaning that the market tries to push below this level but can’t maintain the lower prices and closes higher, then we could consider that the support level is holding and the bears are ‘out of steam’. We just have to sit on our hands and wait to see how the price action reacts in the upcoming trading sessions.

which indi is the one that create a yellow shadow to show inside bar???

mat

It's just called inside bar indicator, you should be able to find it with a quick google search.

tank you very much, i was analizing all my technique, chart byt chart, i follow many many different cross, just to maximize the trade number, but however on the daily chart the real good signals are very few.

i use to look for reversal tab, hammer and shootin star, but those are very few.

instead you use even some signal that follow the trand, that would increase the trade number.....))

i was looking at EurAud that is on a high price level, that has already been reached twice, so this is the third time....could be a break out trap as you use to call it!


looking at this chart i can say: tonight prehaps we will have a nice candle to trade, but....look at the previus day....there was another very very nice long bar.....
looking then at the dynamic resistence passing over there....is it possible that the price is going to rise higher and reach that dynamic resistance before dropping? is this what that long pin want to tell us? the market is going to drop but not as soon as possible....so the last candle is a warning that something will happen, but not before reaching a even higher price.....

isn't it?


and then i will add some other, if you like i try to analize some price action chart

hi again, i want to show you one thing and ask you if my thought about....

i have tested some crosses using my way, and now i m testing the same crosses using DnB way, this means that i do not have 3 ema (21 100 200) but just 2 (10 20) giving not a price stop or limit in the chart....but what should be the "mean price" as you call it: the correct cross value.

our candles create a waves and this wave is surfing up and down around this 2 ema....the more the price has a high distance the more the price will be colled back towards the ema.

what do this means?? it means that we can even open a trade against the trand in those moment couse the price will be called back.
it could be a reverse, or just a retracement, we can have a better idea about that looking at dynamic or static supporto or resistance.

when we get back on the correct price, the ema zone, there will be 2 possibilities: A the price start again to follow the trend or B pierce the 2 ema and consolidate the reverse.

all this thought come from your great site, even if my teacher gave its 2 cents to open my mind....but trading is very personal....it is not only objective.

the test using your way looks very much more profitable than the one using my way....)))

but now, let's talk about what happena when i see a good setup to trigger a position: look at the image i put in



ok sorry for my ppoor data wrtten on.

what happen: i know that this 2 pins are a good reverse sign. but are very very long and i need to find the correct way to trade this.
usually in my way i would have a sl at the very bottom of the 2 pins and the trigger at the very top.
the take profit is at 2305 points, as long as the distance from entry to stop loss (risk:reward 1:1).
they are 2305 mt4 points (230 pips more or less).
many many....prehaps too many, couse such a long trade may loose its momentum and trace back (as in the reality happened) and i loose the trade for something like 20 pips ....so i want to take my cash in before this happen....

for sure i have to go at brek even after 1150 ppoints (115 pips).

i know it is better to trade for a R:R major thatn 1:1, so one loss weight less in the trading balance.
but it is not so easy understanding how many pips a candle will do....so i manage the trade closing not all the trade but a big part of it.

which would be your way to trade such a nice signal))??? i mean how would you set the trigger sl and tp???
i hope i do not ask tooo much , just a comparison....so that i can try to figure out the best solution!!!

mat

forextik,

I think you're first chart is very messy and hard to read, it's way too 'busy' for me and it must confuse you at times. I am not sure what purpose a 2ema is going play in your trading system, also the 200 ema is just way to big of a number and a very very slow reacting moving average to be able to do anything practical with. I really think it's just adding more noise on your charts. I think you would benefit by cleaning up your charts a bit.

The trade you showed in the second chart is nothing I would have traded, you must have taken that one as a two candle reversal, but for me the second candle didn't close high enough to qualify for a strong bullish two candle reversal signal. I try to aim for at least 1:3 risk reward on my trades, it's great that you got 1:1, but 1:1 is not going to help you grow you account in the long run IMO.

Anyway thanks for sharing your charts though, the best part of your post was the comments about EURAUD...

Looking at the EURAUD cross pair after the close of last week’s trading, where a price action event has taken place at the current ‘market top’. From the daily chart point of view, this market has been in an overall range, moves higher terminating at the range top and sell offs bouncing off the range bottom.

When the market tested the range top last weekly, price stalled and then rejected any further moves higher past the resistance containment level. The Friday candle closed as a bearish rejection candle with a lower close than it’s open, signalling lower prices.

This has been a proven level for price action signals, with the last two tests of this level also generating bearish rejection candles that matured into nice profits. EURAUD can produce big moves, so we will be watching this one on Monday, looking for retracement entries.

My take on the same EURAUD. We have a MACD divergence of the triple top formation. If Monday or Tuesday Daily candle closes below Friday's low I will have a short confirmation. Any Gap down could be a break away GAP that I would add to confirmation.

I am hoping there does not gap down in the market as I am targeting a retracement entry here to tighten up the stop loss spread and increase the reward ratio potential of the trade.

ler's hope , couse audusd sometimes has very big gaps!!

Update:- Possible set up if we close below Friday's low.



I see the same story on AUDCHF

but are you going to partially close your trade each time you reach 1:1 1:2 1:3?

Forextik.. I prefer to set independent trades rather than closing partially. I don't have time to wait and watch screen due to my profession. There are EA's that can manage your partial close in the market.

I was triggered long on this 50% Fibo Retracement. AUDCAD Daily Chart.

There have been so many traders trying to short these for months and getting killed. However now there might be sign of short term reversal here with the pin bar formed onm the daily chart. Im not taking but I know a lot of others who are. I made a little bit of money on EURAUD but then stopped out for BE. LOL to be the players who use MM. all that RR crap doesnt work in a dynamic market guys sorry. Its just a stat you get on the end of your month statements

I never got in on the EURAUD trade because there was no retracement and the gap down threw out my approach to the trade, which is lucky because the setup didn't product a strong bearish follow through and how the range top is broken. Ill be watching the range top for bullish signals for long opportunities.

The GBPUSD countertrend setup isn't something I am confident in taking either, just because I generally like to trade countertrend signals from major weekly levels. The reason being, the major weekly levels generally act as a strong termination/reversal point in the markets. The gbpusd just doesn't come off any major weekly levels of interest and also the trend momentum is really showing no signs of exhaustion, if there is a bearish move off the back of this setup, it's probably only going to be a small correction.

TLR waiting for GBPUSD to drop a long signal off a support level to get in with the trend momentum.

The S&P dropped a bullish rejection candle last session off a swing level...

The S&P has been on a killer uptrend lately with prices driving higher into all time high prices consistently during the last few weeks. Retracements back into the mean value have been the best of buying opportunities as it has acted as one of the major turning points in the trend.

Last session the market retraced into the mean value, and a swing level dominant from the daily timeframe perspective. The counter trend retracement move terminated here and rejected the lower prices printing a bullish rejection candle. If price manages to break past it’s highs we could see the next stretch upwards for this trend. If it fails and breaks the low, we could be looking at a much deeper downward movement as the support level breaks. If the bearish event happens we will be looking to employ other forex trading strategies to take advantage of bearish situations.

Never got in on the EURAUD and AUDCHF. Cancelled the orders as they have been invalidated. However, AUDCAD is in trouble. It is much safer keeping up with the Trend.

Yes it is, I only go in countertrend when the signals are strong and form at major weekly turning points. It's also good if the market is stretched right out from the mean so you add in the mean reversion affect as well. Otherwise I am generally buying on weakness or selling signs of strength during trends.