Simple, Powerful and Effective Price Action Trading Strategies

Trend trades are not around much at the moment.

We've just seen a lot of aggressive corrections so for me at the moment it's all about catch the reversion to the mean value, that's all there really is at the moment.

Mean reversion setups are best when there is a large gap in the mean value and price + an S/R level on the daily or weekly chart and a price action pattern that signals the mean reversion is about to happen.

The bigger the gap, the more aggressive the move generally is... see AUDUSD and GBPUSD.


Also, happy May 4th to all Star Wars fans, I wrote a special article today



THE AMAZING SIMILARITIES BETWEEN STAR WARS & FOREX TRADING – MAY 4TH SPECIAL

Hello DALE WOOD thanks a thousand time. Your explanation is clean, clear and straight forward, now I get a clearer picture of the mean reversion trading set up. Concerning the article on star war and fx trader, I have read it but I must read it again because I am really captivated. Its as if you cast a re-reading spell on it LOL. Sincerely that article is COOL.

Just to follow up on the EURUSD...



Last time we looked at the EURUSD market we spoke about the high chance of a pending mean reversion move from the resistance level. We did see a bearish mean reversion, but the move wasn't violent like they usually are and was terminated very quickly. This is a good indicator that the bullish pressure here is still high.

We can see the market corrected close to a swing level and picked up aggressively from there, with the trading day closing as a bullish rejection candle with close price higher than the opening price for the day - a nice bullish sign.

Now it's likely the trend will pick up strength from these temporarily weakened priced and potentially break the overhanging resistance. Personally I would have loved for this signal to actually form off the level marked on the chart (old consolidation resistive containment line).

Good luck on the charts out there.
For more information about my Forex strategies visit me at www.theforexguy.com

The markets have been a little crazy this morning, some of the European currencies like the GBP and EUR have moved sharply only a few hours into the new daily candle – which is abnormal. I believe the markets are reacting to the elections going on in the UK.

To add to the fireworks, Non Farm Payroll is this coming out this New York Session.

Eyeballing the USDCHF daily chart this session, we can see price has reacted to a weekly level and printed a bullish rejection candle with a strong closing price as a result of the bullish presence picking up here.

This market looks like it is due for a correction, so if NFP supports a bullish USD – we could see this setup launch higher and test the mean value area.

For more information about my Forex strategies visit me at www.theforexguy.com

good work .. keep it up...

There has been a lot of strong price action on the New Zealand dollar pairs this morning after the reserve bank of New Zealand made some statements right on the New York close.

The market picked up with volatility straight away impacting all the NZD crosspairs, including the AUDNZD market.

I’ve been watching this market with keen interest, because it has moved into extended prices after this aggressive really out of a double bottom pattern via parity.
We’re seeing heavy bearish rejection here now at these extended prices – which could be an early warning signal the market is ready to start selling, and kick off a mean reversion.

It’s important to note that the area rejected is actually a resistance area on the daily chart also. These variables (over extended prices, resistance area, bearish price action), could be the perfect storm brewing for a nice corrective move here.

The last 4 hour candle actually closed as a bearish rejection candle also for those who like to work the 4 hour time frame.




For more information about my Forex strategies visit me at www.theforexguy.com

A nice setup I can't resist on crude oil for this week



Crude oil – a market many traders are intimidated by, including myself.

This beast can be very hard to tame, as it’s known for it’s extremely explosive volatility. Having said that, I am looking at a very nice buy signal that has formed at the close of last weeks trading.

Technically I can’t fault this setup – in other words I can’t find any reason why I shouldn’t go for this, it’s one of those “text-book” perfect scenarios.
We’ve got a very nice, stable uptrend going on here at the moment. The mean value is beautifully angled upwards and price is gliding over it as the mean holds as dynamic support.

We’ve also got a very clearly defined swing level (old resistance, now new support) here on the daily chart. The market has revealed it’s intention and defending this level as new support by dropping a bullish rejection candle signal – which is the final piece of the puzzle here.

The combination of a swing level, the mean value and swing level all converging in one “hot spot” in this trend leaves us with a very high probability signal.
Now, as I said – Oil is not to be underestimated. It wouldn’t be unlike oil to destroy a nice setup like this one so apply your money management as always.
Lets see how this one plays out.

For more information about my Forex strategies visit me at www.theforexguy.com

Good job DnBPriceAct, learnt alot from your setups, i'll keep following this thread...

I am not in the oil trade. I was waiting for a breakout during the NY session when the Chicago futures exchange is open. I will consider taking any bullish breakouts this session that re-break the high of the signal candle during the NY trading hours.

Gold,Silver,Oil see big moves when it opens. Breakouts that occur then would have less chance of being a fake out. That's why I was being conservative with oil, going for a breakout here. But unfortunately a breakout occurred in London which ruined the plan here. It could still blow up higher but I wanted it to occur during NY!

These preemptive, 'out of money' kind of breakouts tend to just become fakeouts


Checking out the EURNZD today which could bring on a nice correction...



The EURNZD daily chart rally has started to slow right down as sellers start to come in the market approaching the weekly resistance area. Last session we did get a very small rejection candle form here – nothing to get excited about normally but the weekly level does look like a strong one.

Price is extended from the mean value – which basically mean value analysis communicates that a correction is highly possible.

If this market decides to revert to the mean value, we could be looking at a 500 pip move here. These cross pair markets produce good price movement, and the volatility that us swing traders thrive on – that’s why this is one of my favorite markets to trade.

A break of the low could kick off the reversion – we’re already starting to see rejection of higher prices this session. This setup provides a tight stop loss for any punters how there who like to trade these more aggressive signals. Nice reward here too if this one plays out as anticipated.

For more information about my Forex strategies visit me at www.theforexguy.com

On USDCHF right here on my platform looks like its a bearish breakout trap that could drive price up to the nearest resistance. The exact mirror is what is happening on EURUSD except for the fact that its too close to the nearest support. What do you think DALE WOOD?

It doesn't look very convincing at this stage. Look for strong 4 hour rejection candles.

Here is one that is occurring on the AUDUSD market.



We’ve got a serious line up of new announcements from a few central banks this session which is probably going to cause this session to be very volatile.

Leading into the New York session I noticed that the AUDUSD had rejected a breakout higher that occurred during the Asia session – which is what I generally refer too as the asia breakout trap, or asia fakeout.

This is usually a sign of what is to come during the busier sessions, these kind of breakout traps can have good follow through in the London and New York session.
On the 4 hour chart you can see a thick bodied bearish rejection candle which was an early bird signal into the move.

For more information about my Forex strategies visit me at www.theforexguy.com

my trading plan is for both way, may be trigger today or next week.

The good ol' straddle maneuver. Good luck with it, just hopefully these news events fuel a breakout in one direction and don't whip price around like crazy and trigger both your trades.

Always thinking and planning worse case scenario


@sepramfx

I think you're trading in the right direction. Your analysis is logical - but you've got some tight stops there. I hope it works out for you

Best of luck on the charts guys

For more information about my Forex strategies visit me at www.theforexguy.com

Wait for next week? Heck, do it now

Last week we finished off trading with a bit of a fireworks display as volatility entered the market over the chain of high impact releases from big group of central banks.

The volatility leading into the weekend has caused some minor gaping, which can be a nuisance to swing traders sometimes.

One setup we were looking at in the War Room was a bearish rejection candle which communicated a resistance level on the daily chart was holding.

Price is a little expanded from the mean so we could definitely see a correctional move here. If the over all ranging structure plays out that's on the weekly chart, we could see a much further downward movement develop.

For more information about my Forex price action swing strategies visit me at www.theforexguy.com

Thanks DALE WOOD for giving me the inspiration to trade like this. Here is the outcome of my USDCHF trade

Happy Trading

I am not really sure about going long there on the GBPAUD - I think the market is still trying to correct back to the mean.

I am glad to hear that your USDCHF trade plan hit target nice work. You get a good level of satisfaction when you trade with price aciton, as you know you've been able to interpret the plain price charts and base a trading decision straight off price movement alone.

I've also been getting asked a lot about the 'break even stop loss'.

If any traders are interested you can read my post here:




New Article: WHEN SHOULD YOU MOVE YOUR STOP TO BREAK EVEN?

Good day BOSS (Dale Woods), I so much enjoy the richness of this article its very timely and Yummmy! How I have been managing my risk before now is to move the trade to break even the moment I achieve 1:1 R:R. But now I am seeing a more conservative way to move my stop to BE. Thanks allot.