Forex Price Action

Hey everyone,

I’ve been reading all of Johnathon’s articles on his website and I’ve managed to get through the first 50 pages, and plan on reading more. I am glad I found this approach since it’s simple, and it fits my time constraints perfectly.

First question is I sometimes hear people saying “Don’t trade into lots of traffic”. Does this mean, don’t take a reversal if there are lots of potential minor resistance/support levels near by, making it hard to decide where price might struggle and thus where to take profit?

Second question I have is about pin bars. I sometimes see people taking pin bars where the small body is far from the key support/resistance level, however the upper/lower wick contacts the support/resistance level. I also see trades where the small body is AT the support/resistance level, and the wick goes well past the support/resistance level. Are both of these viable? I’ve attached a picture where the body isn’t near the support/resistance, but the wick touches.
http://forums.babypips.com/attachment.php?attachmentid=22201&d=1330068878

Third question I have is about support and resistance. I know Johnathon says to plot only 2 lines, above and below where price is at relevant support/resistance levels. It seems that for the most part people are using a couple months of recent data to look at support and resistance levels. However what if you see a lovely pin bar at a support level, but say 8 months back, there is a relevant resistance level that is close to your pin bar (say a little above it), would you still take the trade?

Basically what I’m trying to say is how relevant is support/resistance from months or even years in the past? If these support and resistance levels haven’t showed up as of late, however your price is approaching one of these levels, do you take this into consideration?

And my last question, I know this has been done to death, is how to you determine trend when you think it may be reversing? I know how to spot obvious trends etc, however what if there has been a slight uptrend, but for the last 15-25 days it has been in a down trend? How do you know if it’s just a big retracement, or an actual reversal? Or would you just ride the momentum of the recent down movement of the last 15-25 days since we are only looking to swing trade?

Thank you all, and hope to be contributing some trades I make soon.

What is your criteria to exit the trade?

Hi Ansunirmal really you should have mapped this out before entering the trade. We must never enter a trade before having our stops and targets mapped out.

I personally would be interested to know what your targets are?

That’s a hell of a trade to take with trend against you! As others say best to map out your targets before hand. price is current bouncing around a VBRN!

see the post 10/05/13 target 1.0250

Hi guys,

Just a question… I have recently missed a weekly BUEB long entry on USD SGD (See below)

My question is, if price were to retrace back to this BUEB closing price in a reasonable time, would it be an opportunity to enter the trade? Or is it a case of if you dont get into the trade at the first opportunity, then leave it out?

Thanks
Owen


Hi All,

I have read the 1st 200 pages of the thread and last 50. Really appreciate you Johnathan for stepping out like you have and really shared an amazing amount of knowledge and experience. You are genuine in your beleifs and methods. I am looking forward to continuing in my learning as I realise each day is a learning day even when you have been trading for years. I have been into a few different things over the last 10yrs. I have spent thousands of dollars on different courses and systems and I do mean thousands. But in the end it looks like the simple things are often the best.
I appreciate also all the others that have posted along the way and can seen that they have grown a lot and are happy in their journey as well. I will be monitoring setups over the next few weeks. But only looking for the best setups and to continue to learn as it unfolds.
I realise now to take it easy and hopefully take the best opportunities and manage trades as well. No need to be in trades all the time. But more profitable to be in the best setups when the come along.
I have been burned on more than a few occasions and got to a point where I nearly gave up on the whole trading idea but fortunately I kept having a feeling inside that this can be done and done well. So along the way I stumbled along babypips and then this thread which I am grateful for, as I guess a lesson is to continue the journey, so you can reach a destination which I guess is different for everyone.
I am interested in the daily setup of possibly a pinbar on the USD/CAD short of the resistance bar it is the current bar which will not close untill the end of New York Session today. Please let me know your thoughts.
I am also an Aussie and live in NSW.
Please keep up the amazing work. If it were not for people like yourself and others in this thread I may have been at a loss so a genuine thankyou and hopefully I will be able to start to recoup thousands of dollars and go for my destination.

Thanks

Shannon:p

@Revival [post #8435]

Those are some good questions, good on you for doing the hard work and due diligence.

Allow me to put in quick thoughts (hopefully Johno or Bryce will add more from their expertise)

@TRAFFIC

Does this mean, don’t take a reversal if there are lots of potential minor resistance/support levels near by, making it hard to decide where price might struggle and thus where to take profit?

Essentially, YES.
‘Traffic’ refers to areas of consolidation/boxing that could hinder price going in the direction we want.
Lots of minor s/r levels are also trouble areas where price could struggle.

@PINBARS

I sometimes see people taking pin bars where the small body is far from the key support/resistance level, however the upper/lower wick contacts the support/resistance level. I also see trades where the small body is AT the support/resistance level, and the wick goes well past the support/resistance level.

My opinion: the most viable pins are those where the body is AT the S/R level and the tail/nose/wick sticks out from the S/R level

@RELEVANT S/R LEVELS

However what if you see a lovely pin bar at a support level, but say 8 months back, there is a relevant resistance level that is close to your pin bar (say a little above it), would you still take the trade?

Well, first off, S/R is a zone

So you said the pin formed at a support level. So I’d double-check (using eyeballs, chart time helps) whether the resistance that appears a little above is part of the same support zone

I would also move one timeframe up (weekly) and re-draw the zone and see where the pin falls within that. If I find myself ‘forcing’ the pin to fit into a zone, it’s not for the taking

Basically what I’m trying to say is how relevant is support/resistance from months or even years in the past? If these support and resistance levels haven’t showed up as of late, however your price is approaching one of these levels, do you take this into consideration?

In short, S/R zones remain relevant for months/years. And the more they appear on a higher timeframe, the more relevant they are likely to be.

If price was approaching a level that hasn’t shown up of late, as long as price has been there before on a high timeframe (daily, weekly), I’d take it into consideration

@TREND

Mr J teaches on catching the latest swing/momentum (on whatever timeframe we are looking at).

The swing/trend is determined by whether price is making higher highs/lows or lower highs/lows, and by what price is doing at the zones around it.

In brief,

If price is making lower highs+lows, and breaking support zone(s), it is in a down-swing. We wait for it to retrace back to the support (now resistance) zone and look for shorts

If price is making higher highs+lows, and breaking resistance zone(s), it is in an up-swing. We wait for it to pullback to the resistance (now support) zone and looking for longs

Sorry I can’t answer based on your 15-25days example; best thing would be if you throw up different charts and we can discuss based on that.

Cheers!

Hallo Owen,

In such a scenario, we just let it go… :slight_smile:

If you enter after price retraces back to BUEB closing price, price may have already hit First Trouble Area and may then be heading toward your SL (!)

One thing you could do is look for long entries on lower TF, esp H4 (since a minor retrace on weekly would be a more significant retrace on H4)

Cheers!

You’re most welcome to the thread Shannon :), and wish you a profitable future going forward!

PS:

My thoughts on USDCAD D1 pin that’s forming

Pros: nice pin at nice level
Cons: the 1-2-3 for the down-move already happened, so we’re in a new upmove ==> the pin is counter-trend (and esp coming after the huge bullish bar.

For me a good play would be to look for longs on lower time-frame (e.g H4) in line with this recent strong up move.

Cheers!



dudest:

I see it this way:


The market is trending lower, it makes LHs and LLs, I think the difference is I look at it “more longterm”, if I count that 3-4 bars swings, the downtrend would not be valid because price has broken last LH this week. The same is at 15.4.2013.

So, is this pin really against trend? Of course there is some bullish momentum, but this is neccessary for us, how else we could trade from swing high if price would not go up. There also was a huge sell of started at 25.4.

Please explain me more, or would you trade long if e.g. pin bar would formed at 1.012 on daily chart (I don’t talk about 4H, because as I know, in this thread are different timeframes traded separately), would not you say then (jesus I can’t express it, what’s the right expression? :slight_smile: )this potential pin bar is against trend again?

Thank for clarifying.

Hallo Belier,

That’s an interesting view (which i respect), and price may well end up doing just that.
'Twill be interesting to see how it unfolds.

W.r.t a pin at 1.0120 on D1 (or better yet, lower near 1.0100) ==> I’d be all over it, and trade it is as a range play

Cheers!


Anyone looking at USD/CHF on the daily chart
Against near term momentum, large previous bar, but compliant PB. top line is notional entry and bottom line notional TP


Hey Milton,

Spotted this aswell but i wont be trading it pretty much for the same reasons you stated:

  • Very strong upwards momentum (last 4 bars of which 3 are strongly bullish).
  • Against the overall trend (up)

Those 2 reasons are enough for me to not trade this (yet) as i simply dont trade against the trend (still learning).

The level you marked as TP i have marked as a area to look for PA to go long with the trend.
(see screenshot)


Remitu

[QUOTE=“Remitu;490458”]

Hey Milton,

Spotted this aswell but i wont be trading it pretty much for the same reasons you stated:

  • Very strong upwards momentum (last 4 bars of which 3 are strongly bullish).
  • Against the overall trend (up)

Those 2 reasons are enough for me to not trade this (yet) as i simply dont trade against the trend (still learning).

The level you marked as TP i have marked as a area to look for PA to go long with the trend.
(see screenshot)
<img src=“301 Moved Permanently”/>

Remitu[/QUOTE]

Completely aligned with your thinking old boy. Given the size of the pin i wondered if anyone out there would take it. Perhaps the more experienced.

You have to go quite far back to find a similar level and also it’s above the fib retracement (618)of the nearest swing high to swing low.


gbpchf


pin bar and inside bar

I agree. Neither usdchf nor gbpchf gives me confidence to take them live. Am demoing gbpchf countertrend bcos i like it better…

Market is in down trend and showing one congestion. Can be traded lhe breakout is this congestion. Trade as short.


Yeah saw GBPCHF aswell which is also against the trend so not taking it either.
Didn’t have time yesterday to post the chart of it but ansunirmal did :slight_smile:

Remitu