A Basic Guide On How To Read and Trade The Markets

Context : weekly UJ



UJ is in well defined uptrend , with minor if at all setbacks , currently we are moving sideways and sit near its highs

Location: daily UJ



after the indecsion got cleared to the upside , the upside momentum increased and we are off its recent highs as of now

Price Action: hourly UJ



the down channel got cleared to the upside , hitting several potential stop loss (buy stop) levels , the early momentum slowed down despite hitting buystop levels, which indicates that some used the generated liquidity to sell into the triggered buystop orderflow , with the result of price didnt go anywhere (selling better than buying),

we broke a minor support level @123.200 and currently formed another small consolidation between 123.00 and 122.720 due to the fact that we didnt got anywhere , despite the stop run , we come to the conclusion that the market is turning weak and therefore i would anticipate a short setup if we break the current support at 122.720


lets compare the USD/JPY vs. DXY (dollar index)



till point A everything went smooth and the UJ wath acting in line with DXY , but as the UJ made a lower low (B) DXY held its recent low(A)
the next rally brought DXY back to its intermediate swing high (C) while UJ made alower high , these indicates weakness in UJ ,

furthermore after a new low was made DXY startet to rally , where UJ didnt participated and moved sideways.. another sign of weakness

setup:



the rangebound UJ , also shows signs of weakness , as the selling pressure seems to be stronger , aswell as the price didnt came back above
the "mean" of 122.890 indicating weakness, the recent selloff made back all ground the sloppy rally attempt gained in a lower number of bars,

which leaves us with a chance to in a breakout + pullback short setup to participate in any further weakness,
however there is a pot. trouble area ahead where price may react , that is the current low at arround 122.650

thats the current situation in UJ , lets see how the market plays out ...
i will be back at the NY session... for an update

support held , and we traded thru the minor resistance , where price rallied to the 50% retr. of the recent downswing , where we had
some indecision in the making.. which resolved itself to the downside on high momentum (weakness)

we currently reside at the "mean" of 122.890 ..



lets see if some intraday scalp setups will show up..

as we head down to the minor support of 122.750

iam watching for either of two things... a reversal or a breakout.. lets see

as the market didnt let me participate in the current rally, due to the V reversal , (which i dont trade) i might get a short op. right now..

but iam quick on this one.. if we dont go past 122.905 ..i willl close out. and may even reverse..the position.. lets see

i dont like the higher low... reduced risk .. now its either SL or initial direction... (position)

Generous documentation of your knowledge

thnx


SL hit

trading UJ


lets try this




will be posting a recap of the session , afterwards (like if , then this or that , why i did what etc...)...

as trading the 1min , taking screen shots and posting on FF .. is a lil bit
too much multitasking..


however i will post , trade management and exits and entries.. asap..

cheers

still holding

exit..

Here is a rundown on the thought process , during the trade , from bar to bar , with time stamps beeing UTC-5

thinking of buying support to test res. and the daily high



Entry: 122.825 Buy Stop
SL : 122.769
Exit : 122.849 Manual



1. 10:30 > i will give price the room to form a higher low if we reject the "mean" (122.850)

2. 10:31 > there is a chance of a breakout if people who lean against the resistance and daily high (sell) , stops get attacked

3. 10:33 > if the resistance level (122.894) gets rejected and we break the trendline plus any retracement froms a lower high= i will exit

4. 10:34 > at this point price may verywell reverse back to support but as iam in a position i will give price room to the current 50% level of the rally @ 122.834**
** if a position is green Hope it will move further into profits , whereas if a position is red Fear that it will move deeper into negative terretory

5. 10:37 > price flirts with the 50% retr. @122.866 of the daily high to the current low , i will give it the room it needs on any reaction

6. 10:38 > price broke the trendline , i will give it room till 122.834 if that level breaks i will exit

7. 10:40 > i will exit on a break of the last bars low

8. 10:43 > my fingers are on the trigger to pull for the exit

9. 10:46 > the low held , a new high was made i redraw the trendline

10.10:51 > price starts to flirt with the res. i will give it room till the trendline and the "mean" @122.850

11.10:53 > rejection of res. give it room til TL and "mean"

12.10:57 > attack attempt

13.10:59 > break of res. fails and we have adep and fast selloff , iam ready to exit... which happened on the next bar.. @ 122.849 (filled)

Oh boy, what a class...thanks for this wonderful thread.

How do you deal with the psychology of a minor down trend inside a major uptrend ?

I was looking for a trade on 2 minute NQ today and missed so many short opportunity's as I was afraid of going against the 1 hour trend .

Some people say just stick to one time frame as multi time frame analysis can lead to confusion .

My thinking was that buyers would come in at the major red S/R lines and the major uptrend would continue . But it seams the minor grey S/R lines gave all the opportunities on this day .

Now I got scared out of my long trade because of the down trend ..... could of been at BE .

You should write a book. Keep up the good work!

I see you use Volume. Could you explain the importance and how you use it Price777999 ?

Danke.

Best see here ..i'm no expert .Cheers

http://www.forexfactory.com/showthre...=445508&page=5

TKS!

thank you ,

@VSAgav

maybe i will , thnx

@price777999


well it depends , on ones preferences and concept or method of the approach of what one wants to trade ,

if you are afraid to pull the trigger , then i assume you dont have a well toughtout and tested trading plan at hands ,and or you dont trust in your abbilities to judge the markets , which will only get better the more time you spend with the markets ... ie expirience ...

could you elobarate , your main approach to the markets ? ie. what are you looking for before you enter a position ? and how you manage an open position ? etc `?
only then i can point you in the right direction ...

there is always a chance of "analysis paralysis" if one doesent have a straight concept on how and what too lookout for in any chart , one can weed most of that
out, by focusing only on key factors which play a significant role...

+ Higher Timeframes usually dominate Smaller ones
+ Trades in the direction of the Main trend bear lower risks
+ Trades against the main direction of the trend bear higher risks
+ Due to the continous nature of price , certain Market structures may evolve which leads to the possibility to take a trade against the main trend which bear low risk
and high rewards ... (more on that later)
+if one trades intraday one can trade verywell in both directions nomather of the main trend , however to know where one is in the bigger picture is always an
advantage and should be considered before and after a trade was made ( u better think twice shorting a setup on the 1min chart , against a weekly support level)


i for myself use "Multi TimeFrame analysis" in my trading and here is a run down of that approach: (based on NQ)




1. Weekly Chart, here i look for the context of bigger picture , ie are we trending ? ranging etc?
in this case we are in a an uptrend , so naturally i would consider any long setups (intraday) as low risk profile

2. Daily Chart , here i look Where we are in the bigger picture ? , in this case we trade at the highs , i also note that
we broke a Trendline so , demand was losing steam at the highs ! if that high 4740 holds , i verywell look for short opportunities

3. Hourly Chart , here i look for price action and market structure , in this case we are not really trending , more of a sloppy sideways movement
with rising support , now as we broke thru the resistance of 4700 , but failed to takeout the 4740 level , i now have to scenarios in my mind.

one : if we form a higher low , i might enter a long to test the highs again (with a chance of a breakout of the highs)
two: if we fail to take out the highs and or form a lower high , i will enter any short opportunity the market throws at me

from then on i go down into the 1min TF , to enter, manage and exit trades.. (intraday)

so i lay plan out ahead of the day/time, based on The Context (What) , The Location (Where) , The Market Structure and Price Action (How)

if any given scenario doesnt work out and based on the ongoing price behaviour the market structure changes or there is a change in behaviour which ads to strenght or weakness , i will scratch or replan old/new scenarios accordingly ...

in the near future i will post further examples of a full trading day from start to finish , either in text or video format , so you can see how i approach the markets..

if u have any further questions or something is unclear ,, just shoot

enjoy the weekend everyone

thanks for this useful information which has add very great impact in my trading carrier i must commend you for this post,keep it up thanks a lot