Forex Price Action

[Vahagn]

No questions asked…

Thanks

[Vahagn]

Well, I’m a beginner also, so my definitions of S/R levels may not be correct, also waiting on Johnathon and others to comment.
But my definition of stronger/weaker is based on what i see as the number of peaks/troughs at a given level.
For example: on my GBPUSD chart, i have turned off auto-scroll (Chart > Properties on MT4)
-> So after switching to line chart, i do a quick scroll back in time, and see, for example, where multiple high peaks seem to coincide. I then draw a line at their peaks (approximate best fit).
-> Then i scroll back forward to current time and see if that also approximately aligns with recent peaks. The more the peaks seeming to meet at that level, the stronger i consider that area to be. The fewer peaks i see hitting that level (over the scan of time), the weaker i consider that level to be (but still relevant, especially for setting stop losses and take profits).
-> And then i switch back to candlesticks.

I have also found though, several times that i end up with too many lines So i’m trying to learn now to eliminate the ones landing on fewer peaks (e.g for resistance) and leave those having more peaks/troughs. Looking forward to Johnathon’s & others’ comments!

Cheers!

dudest,

thanks for you explanations…
Vahagn

[Vahagn]

[QUOTE=dudest;324383]GBPJPY H4

-> After an uptrend, seems a bearish reversal signal has formed on one of my S/R lines. Thinking of taking this one…

Here how I can see the same chart with different 4h data…

Do you consider the longer trend to the down side here? I guess?..and what bearish signal is that one?

Thanks

[Spongybob]

The trend is your frien!

Its very posible for a reversal at this level, but why trade against the trend? Also if you going to trade against the trend, rather wait for todays candle to close a pin, then short the break low. I personally would look for buys on any retracement.

[Spongybob]

Oooops, forgot to add chart. Its been a while since iv been on here :32:

[Spongybob]

If a setup doesnt slap you in the face with simplicity leave it.

On the chart below, daily USD/CAD is clearly in a down trend, price was in a range on the 4H chart, with the trend being down ones preference would be short.

An obvious inside bar @ resistance was formed and a nice risk reward. :33:

[Forex_School_Online]

@Vahagn

Thaks for your quick reply, Johnathon

Great information in this one post! I would like to ask you how you define the trend direction and also how back are you going in the charts to define support and resistance levels.

For ex. for the trend…please, correct me if I am wrong…

On this one …down

On this one … I can’t say,

…but, if we zoom out, the picture changes. The general trend looks more on the down side. Now, considering how the price hesitates and rejects the lows from middle of July 2011 up to beginning February 2012, and having that huge spike 31st of October would you still trade to the down side or …?

Looking forward to learn from you,

Vahagn

I will try and go though and answer 1 at a time…

Okay so keep in mind we are not always in a trend in fact the majority of the time we are range trading! So whilst chart 1 is clearly trending down, chart 2 is in a massive range and not in a definable trend at all. These markets are tough to trade but not impossible.

Whilst in a trend we want to trade from pull backs, when in ranges we want to trade from the extreme high back to the extrem lws and vice versa.

[Forex_School_Online]

Ok so Vahagn and Dudest,

first of: Way to many lines! Keep it simple.

Okay so price is either going to do 2 things.

1: go up
2: go down

With this in mind I only have two lines on my chart to keep them clean. I am only worried about the closest support or resistance lines. I don’t care about anything else as price would have to break these lines first before getting there. Once price breaks one of these I reasess and remark. You have seen my charts previously and you have noticed how much cleaner they are to yours? Keep things clean and simple!

See my chart below for GBPUSD Daily. I have zoomed out to highlight better.

As for the USDJPY BEEB (Bearish Engulfing Bar), A BEEB must do what it’s name states and that is engulf the entire previous bar and what I can see of your chart it does not. On my New York close charts it does not even look similar.

Regards,

Johnathon

[Forex_School_Online]

@Vahagn

[QUOTE=dudest;324383]GBPJPY H4

-> After an uptrend, seems a bearish reversal signal has formed on one of my S/R lines. Thinking of taking this one…

Here how I can see the same chart with different 4h data…

Do you consider the longer trend to the down side here? I guess?..and what bearish signal is that one?

Thanks

Firstly everyone will see different charts and setups as different brokers have differenet cadle close times. I use New York close candles.

Next I will never directly say yes or no to or give direct advice as anything can and does happen in the markets.

Also no strategy is even correct all of the time. Every strategy in the world has losses so start getting your head around it as it is how you deal with these that defines you from the rest!

A super common mistake with new traders is picking tops and bottoms!!! Always try to trade within the trend. Wait for pullbacks. Extreme highs and lows are super dangerous.

Okay so even though you can get away with dodgy trades occasionally it is all about only trading the great trades as the the more often than not the crappy trades will lose.

[Forex_School_Online]

The trend is your frien!

Its very posible for a reversal at this level, but why trade against the trend? Also if you going to trade against the trend, rather wait for todays candle to close a pin, then short the break low. I personally would look for buys on any retracement.

Yep Agreed!

[Forex_School_Online]

The last two things I want to say are the only silly question is the one not asked, and also if you are thinking something chances are someone else is to.

I think I have answered all the question so far.

Safe trading,

Johnathon

[odds_on]

I only have two lines on my chart to keep them clean. I am only worried about the closest support or resistance lines. I don’t care about anything else as price would have to break these lines first before getting there. Once price breaks one of these I reasess and remark.

Spot on! (excuse the pun)
Totally agree with that view. Let the market work itself out around the next level of potential conflict first before worrying about what it’s going to do next. There are so many contradictory events churning over every week in the markets. You’ve got enough to watch & account for with the immediate levels, let alone worrying about what price will do several layers up or down the chart.

Price will tell you what it intends to do courtesy of the clearly defined candles & bars that reinforce the winning side of the market. Just pay attention to the ones that se up on & around the important levels.

[Vahagn]

@Forex_School_Online

Ok so Vahagn and Dudest,

first of: Way to many lines! Keep it simple.

Okay so price is either going to do 2 things.

1: go up
2: go down

With this in mind I only have two lines on my chart to keep them clean. I am only worried about the closest support or resistance lines. I don’t care about anything else as price would have to break these lines first before getting there. Once price breaks one of these I reasess and remark. You have seen my charts previously and you have noticed how much cleaner they are to yours? Keep things clean and simple!

See my chart below for GBPUSD Daily. I have zoomed out to highlight better.

As for the USDJPY BEEB (Bearish Engulfing Bar), A BEEB must do what it’s name states and that is engulf the entire previous bar and what I can see of your chart it does not. On my New York close charts it does not even look similar.

Regards,

Johnathon

Johnathon,

Thanks for you help…
I am confused about BEEB. Just to clear up the confusion…
Is this pattern considered as BEEB…?

[Vahagn]

Spot on! (excuse the pun)
Totally agree with that view. Let the market work itself out around the next level of potential conflict first before worrying about what it’s going to do next. There are so many contradictory events churning over every week in the markets. You’ve got enough to watch & account for with the immediate levels, let alone worrying about what price will do several layers up or down the chart.

Price will tell you what it intends to do courtesy of the clearly defined candles & bars that reinforce the winning side of the market. Just pay attention to the ones that se up on & around the important levels.

Thanks a lot for your thoughts guys !!!

Vahagn

[Forex_School_Online]

@Vahagn

Johnathon,

Thanks for you help…
I am confused about BEEB. Just to clear up the confusion…
Is this pattern considered as BEEB…?

Short answer: NO.

It does not engulf the entire previous candle. So the engulfing bar body and whick (the whole candle) must engulf the whole of the previous candle.

I have attached you chart below with a line on it. For your chart to be a BEEB the candle would need to have a whick that had to haver gone below the low of the previous bar.

So basically the engulfing bar must have a low that is lower than the previous bars low and a high that is higher than previous bars high.

Check charts below for BEEB:

Regards,

Johnathon

[Vahagn]

@Forex_School_Online

Short answer: NO.

It does not engulf the entire previous candle. So the engulfing bar body and whick (the whole candle) must engulf the whole of the previous candle.

I have attached you chart below with a line on it. For your chart to be a BEEB the candle would need to have a whick that had to haver gone below the low of the previous bar.

So basically the engulfing bar must have a low that is lower than the previous bars low and a high that is higher than previous bars high.

Check charts below for BEEB:

Regards,

Johnathon

OK ! Now I got it… at first I thought only the body must be engulfed within the next candles body.

Thanks Johnathon for clarification

Vahagn

[dudest]

The trend is your frien!

Its very posible for a reversal at this level, but why trade against the trend? Also if you going to trade against the trend, rather wait for todays candle to close a pin, then short the break low. I personally would look for buys on any retracement.

Yep Agreed!

Thanks Spongybob and Johnathon for the correction, much appreciated.
Lesson learned: ALWAYS try to trade within the trend, wait for the pullback

Cheers

[Spongybob]

Nicely put odds on

[Spongybob]

Here we have USD/CAD, its currently trading in a range since early Feb.

At the bottom of the range we have an inside bar, followed by a pin bar then current bar tried breaking the low. Is this a fakey bar setup? Very possible!

[Forex_School_Online]

OK ! Now I got it… at first I thought only the body must be engulfed within the next candles body.

Thanks Johnathon for clarification

Vahagn

Vahagn,

here is a quick article that explains the make up of bullish and bearish engulfing bars a little better that may help you understand a little better. Engulfing Bare Intro…

Safe trading all,

Johnathon