Forex Price Action

But the pin bar doesn’t need to have the candle wick minimum 3 times the length of the candle body?
That pin bar had only 2 times the lenght of candle body.

Pin Bar

Hallo Tahir,

Apologies for delay in reply to your query.

The one thing we’re concerned about when entering a trade is high probability of success. This high probability is brought together by the coming together (confluence) of key factors.

S/R levels are simply areas where traders (humans) place importance and plan their trading around (buy;sell/enter;exit)
VBRNs (and their subsets BRNs and RNs) are some of those areas.

In case the presence of a big round no at the resistance area does the bearish PA signal candle suppose to close below the big round no so that,s mean the price is rejecting the big round no?

YES.

Mr J emphasizes on reading the whole price action story. When price is at a resistance (than happens to be a VBRN) and a bearish PA signal is formed, it needs to close BELOW the VBRN to show to us that the bears are in control. If it fails to close below the VBRN, it shows that there is a struggle going on (and those are some of the cases that we “pass” on setups).

And what does the big round no suppose to mean at the support area?

It means confluence. The area is a support because traders behave the same way around that VBRN (i.e buy/exit sells).

In case if the vbrn is not like 0.9100 and it,s like 0.9106 so we need to round it off?

Since S/R is a zone, price will not always touch the round number before doing something. Sometimes the stack of orders near the VBRN is so large, that price will turn around before hitting the number.

So, for example, a VBRN of 1.0000 may be bounded by candle wicks hitting 0.9995, 0.9997, 0.9991, etc

On our charts, we simply draw a line at 1.0000 to keep things simple. Drawing a line at say 0.9995 is also NOT WRONG (it’s the same zone). The important thing is your mind has taken note of what’s going on at that level.

Finally does the importance of the big round no stands equally with the PA ingredients while baking the A+ cake?

Round numbers are implicitly contained in ingredient #1 -> key horizontal zone.

Being aware of round numbers (especially BRNs and VBRNs) helps us to choose and manage trades, so that we don’t trade into them.

EG 1: entering a bullish pin that has formed UNDER a VBRN may NOT be a good idea
EG 2: if you’re in a trade (say, sell at 1.0050), it may be a good idea to plan to do something around 1.0000 VBRN

Practical examples:
a) USDCAD: VBRN of 1.0000 (see how price behaves around that)
b) GBPUSD: BRN of 1.6000 (see how price behaves around that)
c) AUDNZD: RN of 1.2400 (see how price behaves around that)

I hope that helps. Incase of any confusion, kindly feedback and it’ll be sorted out.

Cheers!

You’re right.

I gauged it by eye, and it looked OK, but measuring as you did, it falls short.

All towards making it a pass.

Thanks

Just wanted to quickly recap the AUDNZD BEEB that a lot of people cleaned up on this week. I personally missed it due to being away from computer with something else, hoever this was a solid setups. Formed within the strong trend, at a pullback to a value area that was also resistance. This was up at a high and sticking out. This ticked all the boxes of the things I go on and on about. It was bascially just very obvious. I got quite a few emails about this one with people cleaning up and basically a lot of people had real “Ah ha” moments with this trade. it helped seeing what we talk about a lot being all in the one setups.

Well done to those who cleaned up on this one!

Johnathon

AUDNZD 4HR CHART


Certainly you can,t call this a A+ trade because the pin bar didn,t form at the swing high secondly look at the traffic at your left.

Dudest,

Thanks for your analysis ,this goes along way in improving the trade i pick.

Hi, I posted this Crude set up yesterday that I was taking a look at and wanted to update on the trade I ended up taking.

Unfortunately the 4hr chart’s didn’t set up with any sell signals, however the 1hr did give a decent opportunity to go short.

I took a short on a 1hr BEEB that formed at the 96.85 area, a retest of the bull uptrend and a 50% retracement from the markets recent downswing.


Here’s a zoomed out chart so it’s easier to see. The market did sell off and I ended up closing for just over 100 points.


I know that Johnathan say’s to trade in the direction of the trend and this trade wasn’t, but what I wanted to know is: - Was the 1hr BEEB a solid BEEB and a valid signal?

Thanks

Hello Dudest) Thanks for the answer its so well detailed and easy to understand.And no need for the apologies i understand you got other things in your life.Just one thing is not clear in case of the presence of the BRN at the support area does the bullish PA candle needs to close above the BRN which means the bulls are in control and they are rejecting the lower price level?

You were trading with the recent trend on the one hour chart. We are looking at the chart we are trading for the current momentum/trends.

This was a super good level to short but very average BEEB. Very small and would have been better if engulfed the previous few candles as well. As it were it was stuck in price and not very commanding. The smaller the time frame the larger and more obvious the setup needs to be to avoid false signals.

All the same nice profit!

Johnathon

Cheers. Thanks for the quick reply!

Nice setup but where was the previous resistance area where the support breaks the resistance so we consider that the BEEB was formed at the logical resistance area?

Round number - 1.24000

audnzd daily chart


Thanks for the input johnathon) Actually i can,t see this area on a 4hour chart.

That’s why we mark key levels on the daily and then trade on the intraday charts using these levels…

So if i mark S&R levels on weekly then i should trade on the daily chart ?

YES…U CAN…

remember one thing… if the level(R\S) u marked is important …then u can see the PA signal in lower time frames also…here we need to observe is…the area must be well respected in the past. thank u.

YES.

If round number is acting as support, bullish PA needs to close above it to show bullish control.

Cheers!

From the Daily. The relevant zone happened to be around 1.2400 RN. BEEB formed at this level on H4.



EDIT: Sorry, have just seen Johnathon’s reply on the same!

Hi Floyd,

My thoughts on this:

Scenario A -> same here (i.e, uptrend = higher highs and higher lows from left to right)
Scenario B -> same here (i.e, downtrend = lower highs and lower lows from left to right)
Scenario C -> same here (i.e, it is ranging)

For ending of trend: IMHO, not possible to ‘know’.

Best way to ‘gauge’ I think (using pure price action) is when the opposite starts happening to the highs and lows and when S/R’s start being broken in reverse direction

E.G: uptrend may be slowing down when:

price starts making lower highs and lower lows, AND

price starts breaking support, and not breaking the old support/new resistance upon retracement

Note that if the old support/new resistance was broken on retracement, then that could indicate that the uptrend was back (esp if again that support was tested and held).

==

Also, how much data should one plot on a chart in terms of number of hours/days/weeks/months before applying the concepts mentioned at A), B) and C) above.

Johnathon stresses on keeping things simple. Whatever time-frame you are on, the info on that chart in-front of you is sufficient to show you the [B]most recent trend/swing[/B] (which is what we are interested in)

==

Hope the above makes sense. That’s how I look at it.
In-case it doesn’t, throw up a chart and we can slice it up together until it makes sense :slight_smile:

Cheers!