Tess when you come up with major s/r levels, How many times does a price have to touch a level for you to consider it significant, obviously the more price touches the stronger it is, but what is a minimal amount 2? 5? Also what do you think of bollinger bands for showing A.range, B.trend, C.S/R? Im sorry if Im asking to much but i read and reread your posts. You are a great teacher and amazingly patient, any thoughts would be great.
thanks, John
Hello John,
Price merely has to re-visit the area of significance for me to become interested in taking a level on. Iâm not one for waiting around to witness excessive confirmation to be honest.
If a previously strong level or zone of s&r comes into view, & I get a signal from a specific set-up to engage, then Iâll take it on providing it affords sensible risk & reasonable profit potential.
Jocelyn (& her crew) usually engages via the smaller timeframes as & when a level of interest comes back on the radar. Itâs to probe & test the level really, just to ensure itâs playing ball & is setting up to repeat itâs previous behaviour traits.
As an example, Iâll throw up a couple charts of Cable to better explain my comments.
The 4 hour charts (2) highlight the specific zone of interest & the smaller 5min chart magnifies the levels for clearer decision making.
Essentially, Iâm looking to see if this pair is displaying any propensity to ârepeatâ the shorting behaviour at this area of previous supply.
Jos has been playing the channel (long from the bottom - short off the top) & will continue to do so until it closes above-below on a daily candle basis with a solid test.
We donât observe Bollinger Bands John. Neither do we have any time for Gann, Elliot Wave, Moving Averages or any other supposed âmarket enhancingâ nonsense.
Price action & itâs behaviour on & around previous levels or zones of supply & demand is all that interests us. Understanding & interpreting the psychology of market participants as & when prices begin vibrating around these levels tells us all we need to know.
Anything else (indicators) is merely an unecessary distraction.
[B]1)[/B] It doesnât matter what I think. As long as whatever youâre utilizing is of positive benefit, then use it whilst continuing to explore & develop your other preferred areaâs of study & market observation such as s&r etc.
[B]2)[/B] And you will if thatâs what you really wish to do. Trouble is, it often takes an awful long while before you go full circle & realize that the simple tactics are quite often the most productive.
Itâs all a matter of trial & error. But donât completely abandon your current mode of market observation. All it will do is frustrate & irritate you. Like I said, if youâre extracting profit from your instruments, then continue & develop alternative areaâs of study.
[B]3)[/B] Experiment with your timeframes. Take a look at the Daily & focus on 2 or 3 real big, obvious levels (if they exist) & draw your horizontal line, tying them all up. Cascade the line down onto all the lower timeframes & leave it there until price begins threatening that level.
If the Daily is of little value, then repeat the process on the 4 hour and/or 1 hour timeframes. Only plot those levels which really stand out & hit you as soon as you look to the left on your chart.
If your technical charts allow you to zoom out, then all the better. The more price activity you can squeeze onto the specific chart reference, the better.
Get used to plotting the big, ballsy zones first & leave the lower tiered (minor) levels until you begin to get accustomed to the process.
Remember: take bite sized chunks out of your learning process. That way, you wonât become overwhelmed & discouraged with the educational journey.
[B]4)[/B] That takes time, & experience comes with time. You canât rush or fast forward this element of your education unfortunately.
It can be made a little less stressful by maybe taking heed of others warning signs & advice, but generally you need to experience the failures & setbacks to make the success all the more tangible.
Determination & patience will take you a good lick down the road. Donât be in a rush to give all your trading account money to the brokers. Take your time & flip to demo mode each time you wish to test out a particular item of interest.
Ensure youâre fully conversant with whatever it is youâre using before commiting real money to the game.
and [B]ENJOY[/B] itâŚitâs meant to be mildly pleasurable at the very least 
thanks for the advice. The good news is Im still learning so I havent developed any bad habits. Ill be implementing more horizontal lines and less diagnals. Ive always felt that systems that involve many indicators is bad. I will continue to pour over yours and your sisters posts. You should write a book (if u havent already), definatly an asset to this site. One question, what is your favorite moving average and why?
thnks, john
it occurs to me maybe you dnt like moving averages. I know ive read some commenting about others use of maâs well if you dnt then dnt mind me ive been reading and reading and after a while i canât tell heads from tails. anyway news time gotta go 
I love picking your brain. What I am doing is to try to plot the major levels like you suggest and within those levels I can watch the price action. One thing I am getting is that you look to those levels to see how price will respond. The one thing is I am not an intraday trader and it is hard for me to comit to a movement for a period of time. When you discus managing your trade it is those smaller movements that I am after. My goal in trading is to get more comfortable in the longer terms and be able to manage them like you do with confidence.
thanks, John
OK so seriously my perspective has been to narrow. Ive only been looking at the imeidiate picture and thanks to all these posts Ive been broadening my horizon. I went and erased all my charts and started fresh. I zoned out to the day and plotted what i felt were significant zones to look at, then i narrowed to the 4 hour and plotted significant zones and now on the 15 minute chart I can really get a sense of where price is heading. Following Tessâ advice I wont just jump into anything but rather wait for some confirmations ie higher highs lower lows⌠then I will manage my positions based on price relative to those critical zones, realizing that price will trend to those serious zones based on past performance. I know I have a ton to learn so I will keep an open mind and any input whatsoever is appreciated.
Good stuff, should be an interesting journey for you. If you get the chance, then by all means haul up a chart or two with your observations plotted. It will hopefully afford you a chance to receive a little feedback from folks.
Do you have any specific set-ups or triggers in mind to execute via the trend/peak-trough behaviour you mention above?
It might be helpful to you when utilizing any type of strategy (s&r observations included) to have a clearly defined trade plan in mind so you donât become distracted, waylaid or confused when price action doesnât play ball exactly as you planned around one of your zones of interest.
It doesnât need to be âwar & peaceââŚmerely a few rules or aids written down to assist with your planning.
Obviously, any triggers and/or set-ups would ideally be already tested & adjudged under differing market conditions before attempting to trade real money.
The generic plan of executing in harmony with peak-trough (higher high-higher low etc) behaviour is cool, but you also need maybe one or two specific tools with which to go about your business of extracting profit & controlling your risk.
Always attempt to pin down as tight as you can your intended course of action as & when a possible trade comes into view. And that goes for negative as well as positive outcomes - you gotta cover all your bases!
That type of behaviour will help to instill discipline, consistancy & better assist in narrowing down possible leaks or discepancies in your strategy.
It will save you an awful lot of time if youâre looking to improve or tweak a certain element of your strategy, if you know exactly how it works in differing conditions.
Good luck with your research & planning.
Does price action often retrace upon the break of a resistance line before it continues its way upward?
George
Thereâs no real uniformity to it George. What youâll generally find is, that if a level is being fought out with at a fierce Bull-Bear fulcrum & price is coiling up or engaged in a tight sideways consolidation, then price will break-out aggressively without looking back.
Range break outs such as Asian, previous high-low trenches at least 100 pips wide, or maybe a key swing level where price has been strongly rejected will normally offer a 2nd opportunity to engage via a pullback to test the demand.
But unfortunately, markets donât work to precise rules.
Which is why traders (especially new comers) should have a specific template in place to trade each occurance.
If youâre a breakout trader & you only take a position if price pulls back & forms a doji or a continuation set-up, then thatâs [B]your specific [/B]rule or signal to engage. If price doesnât offer you your signal, then tough - that one slips thru the net.
Get my drift?
Just completed my final year project and it just dawned on me that soon ill be joining the ranks of the 9-5 squad or in my case 6:30-6, 12 hour daysâŚurghh!!!
It truly is the end of an era 
Anyway, Ive been looking over some charts this weekend trying to find reliable price patterns around s&r lines that would help signal prices intent. Ive attached three diagrams of trend reversals. Iâm leaning toward the first two, price making a lower high. However if i was to stick to just this pattern i would have missed some really good moves. Iâve noticed that the 3rd reversal pattern happens often enough, would it be best to let it go and try to get in on the move on a minor correction? Which of them would be the more reliable set up?
Hope you guys enjoyed your Easter
George
Hi kagein,
I tend towards the third set up. Iâm not an experienced trader but I had some success trading price action set ups. At least Iâm not melting down my account.
There is a s/r line @ 2.0250 and the candles show something like indecision (spinning top, doji). There would have been a chance to trade the break of the red candle @ 2.0248. Great entry!
But I wouldnât have trade it like this. Too scary for me. On the 4h chart the last candles were going up. I would have been unsure about the trend. But after the finish of the 16:00 candle (btw Iâm GMT +1)we see a nice pin bar. Now itâs seem more clearer to me that the last 4h candles were just a retracement and that the trend is going south again. So the alternative would be to trade the break of the 4H pin bar @ around 2.0153.
Now I scroll back to the 15 min chart. I could trade the red 20:00 candle. HmmâŚAgain, Iâm afraid. Itâs late in the evening and I donât want to hold an overnight position. So I donât trade.
The next day I got lucky. The early bird catches the worm. Price retraced up to 2.0153 but didnât get higher.
From 8:45 Inside bars are forming. I would take the break of the green 8:30 candle south. That happens at 9:15. Also the stochastic were in overbought territory.
Thatâs my reasoning. And again Iâm not experienced enough. Would like to hear other opinions. Also in hindsight itâs always easier to explain the moves.
I try to attach some pics. Iâm doing it first time. I donât know if it works.
Summerpip
This is my 3rd pic. There was something wrong with my 3rd pic. I tried to edit my previous message and upload the 3rd pic. But it didnât work. So I post a new message with the correct one.
Also I have 2 computers. I can see the pics on one of them (Windows Me), but I donât see them on the new one which is running Winows Vista. I hope you can see them. Maybe itâs the file type?
Tess and Jocelyn , I must tell you that this thread and the topics discussed ( in particular your answers) are one of the most interesting threads that I have found on the entire forum!
Can you tell me how many pairs you monitor, and what pairs do you trade most?
best regards
thierry
Hello thierry,
Thank you very much for your kind words. Much appreciated
We monitor all the relevant carry trade instruments (those v/s Yen) & the majors.
Some of the exotics are also on the radar, but to be honest the volumes/liquidity on those instruments can be very wishy washy, so we tend to stick to the ones which we can get filled on with decent size.
Personally, I like to watch the GBPUSD, EURJPY, GBPJPY & NZDJPY via the 60min+ timeframes.
Jocelyn trades those (+ Oz & Swiss) via the smaller timeframes for specific objectives when she has to.
Like everyone else, we like to engage where the liquidity is good & the ranges are active
Hi everybody, I have a question. Ive been working on my own template and I have changed my focus to price action and chart patterns. I still use stochs as per the ib/ob system of James. My question is about average daily range. While Im trading I read and reread this thread and the 40-100 for a glimpse into the mind of in my opinion the best traders and teachers (Tess, Jocelyn, Tony, Jimmymac). Ive come across a piece where you guys talk about average true range of a pair. I would like to incorporate this into my arsenal but frankly im not sure how to. First how do I find the average range of a pair, Second can you help me to define what that means. Is it the total of the up and down movement or is it the total of the deviation between high and low for a given day, I think this would be usefull in particular to see if a move is fizzling out. Since I am still trying to define my stratagy I welcome any input or suggestions, and finally I wanted to thank everybody again who participates and offers advice and insight, because of you I have grown and my perspective has changed. Because I am new to trading I havent developed any really bad habits other than my nervous finger on the button to close my position but Im working on it.
thanks, john
Hey John,
Yeah we keep tabs on the average daily & weekly range prints of the pairs on our watch list.
Simply put, they record the high to low extremes which a pair travels during the trading day & then averages those extremes out over a given period of sessions. Usually 1âŚ5âŚ10 & 20 days are the markers.
I tend to take a note of the weekly ranges. Jos observes the daily ranges. But then, we got differing aims & objectives so each to their own.
One of our colleagues plots them on a computer program & spews them out every morning for us, but JimmyMac came across a file a while back on the thread below.
http://forums.babypips.com/newbie-island/9576-adr-indicator-mt4.html
If you run Metacharts itâll pop the data straight onto your charts for you. Just saves running a seperate data sheet for the info.
Itâs been said loads of times but iâm gonna say it again, this is a fantastic thread. Input from the regular contributors is invaluable and has with out question shaved months off my forex education and im sure of other posters alike.
If any of you guys are in my neck of the woods and fancy a big mac with a cheap beer at a student barâŚim your guy!!!
I see that top line resistance marker has contained the bullish activity today then huh? 
Note also the (recent) demand fulcrum bounced price off the 1st retreat from 2.0100 in mid-morning London trade.
That lower consolidation range churned much of yesterdays Tokyo & early London activity before making a run for the supply level into late morning. These levels will quite often result in successful âtestsâ & are well worth keeping a sharp eye on.
Obviously, this pair benefited from the dovish Fed chatter & the knock-on ECB hawkish rhetoric earlier, but from a technical standpoint these levels can be confidently flagged & tagged as price gets shunted back & forth.
If any of you managed to avail yourselves of a few bucks on the back of these ping-pong levels today, then well done!
This morning has thrown up a good example of the above comment made in yesterdayâs post (#737).
This is the type of play which Jos & her mob will take on if the technical environment tips the nod.
GBP is quite obviously well bid into this mornings London activity & has printed a very shallow pullback in light Tokyo trade.
Those who choose to engage via the IB/OB trigger had a beaut of a trigger on their 15min frames just a few moments ago.
If you also prefer to drill tightly into that zone, you could haul up a fast timeframe (1min?) to cut your entry to the quick.
Positioning yourself ahead of the hard resistance line offers you the chance to either bail out on any strong rejection or hang loose with a relaxed stop to check the intent & support of any (buy) stop traffic the other side of that 2.0100 ceiling.
You now have a target zone above here @ 2.0220 to aim for & can trail your entry behind the peaks & troughs on either the 1min frame or the 5/15m charts depending on the breakout strength. This type of entry also allows you to peel off partial profit in case of a pullback to the b/o line.
Those who prefer to wait for a possible pullback of this upper line to âtestâ the genuine intent of the Bullish move also now have a marker to work with, knowing that 2,0100 is a reasonably reliable s&r camp at current levels.
Hi all!
Can anyone explain that 100 pip candle on GBPJPY at 12:30 GMT?
As far as i know ther werenât any Pound/Yen related news near.
Thanks!
You need to be aware of any news/data which will also impact upon USDJPY when youâre following the crosses Harry.
Pound/Yen is the result of GBPUSD & USDJPY vibration.
There was U.S gdp & employment claims printing at 12.30GMT. They printed in-line with expectations & a good chunk of participants were betting the data would come in Dollar negative.
Also, weâre only a few days away from Quarter end. Funds will be looking to square their books & balance up into 2nd Quarter. You need to be very aware of these events as Hedge Funds, large firms, Bank desks etc attempt to influence levels in order to trim out/load up etc on certain pairs.
Theyâll take advantage of these situations to work orders thru the system & aggressively lever themselves in & out of adverse positions.