Forex Price Action

dudest · February 23, 2012, 7:14am

Hi Vahagn!

On FXDD:

Vahagn · February 23, 2012, 7:18am

Thank you very much bhops for your explanation ! ! !
I am happy to here from you guys a positive feedback about my charts and way to think !

Vahagn · February 23, 2012, 7:25am

Yep teb5108,
I was thinking that way too… happy to think the same way as you guys!

Vahagn · February 23, 2012, 7:26am

Oh, Great dudest !!!

I have the Gold now!

Thanks a lot

teb5108 · February 23, 2012, 7:57am

I hate to be off topic here but I see some of you are using fxdd. Does anyone else experience connection issues with them? There’s times where they will just black out for an hour or more and then come back on line. I’m having one right now which is what made me think of it…

Vahagn · February 23, 2012, 8:17am

Never experience anything like that…

Forex_School_Online · February 23, 2012, 8:35am

Did you see my post on this pair this morning? Okay so I hope this will go short and back lower. The reason being is we have broken out of a hugely important area. Price will most likely retrace back lower to this area and finbd support. If we can get PA at this level to go long we then have a nice trade on our hands.

See chart:

PS: Can we keep this thread to discussing Price Action. This is not directed at anyone or meant to pee anyone off. The last two pages in here have just been one line post about brokers. People can find all broker info or asl broker questions in the “rate my broker” threads. Please can we keep this different and make it a place to learn and not like all the other threads where people get fed up of off topic information. I really wan’t to help people learn to trade Price Action but it makes it hard when I have to go sifting through of topic info just to get to a decent question.

Safe trading,

Johnathon

Forex_School_Online · February 23, 2012, 8:44am

Hello Teb,

firstly welcome and hope to see you posting more often.

okay so I am not a huge fan of the weekly but I will trade when I see a nice trade. The monthly I do not as you really are getting into investing here.

As for the EURUSD it is sitting right at a super important level. Price remains stuck under this level and until it breaks higher I favor shorts on daily and weekly. Not price is now sittig right on it looking to break higher so keep an eye out.

If I see a daily pin bar to go short at this level I have highlighted I will be getting short.

See charts:

NOTE: Both charts have same level marked.

Safe trading,

Johnathon

Vahagn · February 23, 2012, 8:52am

Forex_School_Online:

Did you see my post on this pair this morning? Okay so I hope this will go short and back lower. The reason being is we have broken out of a hugely important area. Price will most likely retrace back lower to this area and finbd support. If we can get PA at this level to go long we then have a nice trade on our hands.

See chart:

PS: Can we keep this thread to discussing Price Action. This is not directed at anyone or meant to pee anyone off. The last two pages in here have just been one line post about brokers. People can find all broker info or asl broker questions in the “rate my broker” threads. Please can we keep this different and make it a place to learn and not like all the other threads where people get fed up of off topic information. I really wan’t to help people learn to trade Price Action but it makes it hard when I have to go sifting through of topic info just to get to a decent question.

Safe trading,

Johnathon

Johnathon,
Thanks for reply and sorry for going off the topic!
Will consider the next.
Vahagn

Forex_School_Online · February 23, 2012, 9:01am

Hey nah that’s kool.

Thing is I am just trying to keep to a subject so anyone can come in here and straight away start learning. Not have to sift through pages of other info they could find in another section. At the end of the day I am trying to keep it clean for people like you!

So lets all word together and learn Price Action and build something different from all the other rubbish.

Regards,

Johnathon

teb5108 · February 23, 2012, 9:05am

Hey Jonathan thanks for the reply. The reason I like the thought of the weekly is because it is the only true open/close candle in forex.

When investing in forex do you think that using price action alone is possible or are fundamentals necessary to be any good at it?

Forex_School_Online · February 23, 2012, 9:06am

Ok mate,

be talking to you soon.

Safe trading,

Johnathon

Forex_School_Online · February 23, 2012, 9:08am

Thats a nice chart and also the way you need to start watching and hunting your trades.

Nice work! Much better than picking tops and bottoms that kill account so quickly! Trade with the trend!

Johnathon

Forex_School_Online · February 23, 2012, 9:11am

Price Action alone. Nothing else whatsoever is needed.

Price Action candles are thought to already have the news and fundamentals of a currency pair factored into them. In other words whatever the news does it is already showing us on our charts. Of course at times new announcements will make price react a little more than usual, however price in most cases will already be showing us the way it before the news release.

As the little guys in the huge market that is Forex we do not have anywhere near the knowledge of the big guys so give up on trying to trade based on what the news is telling you. By the time you have found out what the news has done the banks and big players have made their millions (if not trillions) and closed their positions. All the while your are still working out whether you want to go long or short based on the new announcement! Forget it! The Price Action will reflect exactly what has happened in the news and fundamental, so as long as you know how to trade price you will never have to worry about following the new announcement or fundamentals.

Safe trading,

Johnathon

Vahagn · February 23, 2012, 9:18am

Thanks Johnathon!
Nice to hear that from you!

Vahagn · February 23, 2012, 12:27pm

Could we consider this as a setup, if by the close of that candle we get PB? Or there is not enough Price Action…?! Could we say Pin Bar near resistance ?

Forex_School_Online · February 23, 2012, 9:50pm

So this one worked out quite nicely as quite often PA with strong moves will. In saying that getting into the habit of trading these will cost you. There is a reason a lot of people after trading Price Action will often say that they found the candlesticks to be unreliable. The reason for this is the areas they are playing them from and the price action signals themselves are rubbish setups. We can’t get into rubbish setups and then blame the candles. The difference between someone who thinks candles are letting them down and the other person who makes every month from them is the trader who makes money has learnt to be very selective in their trade selection. They have learnt over time to only play the best setups. Not every candle they see that remotely looks like a pin bar etc.

Okay so this would have been killer trade if it pushed higher into the value area. We must remember the pin bar is actually called: The Pin Bar Reversal and when we are playing reversal signals we are looking for price to reverse. Because of this we need to pick them from swing point or in other words we don’t want to trade a bearish pin from a swing low like this chart. We are looking for price to reverse so to go short we need to see a pin after price has gone up. Hope you are staying with me here as this is important.

Okay so look at chart below and I have manipulated the chart to show what would have been a killer setup.

This chart below is the same chart as you have only I have “added” some price to give you an example. Notice now the difference how we are trading for the price to reverse? Hope this makes sense.

lastly the reason I say be careful trading pins that have formed without a pullback is other traders look for these signals as the exact opposite as what you are thinking. For example you may see a bearish pin bar that forms at a swing low (instead of swing high). This is actually an inverted pin and a reversal signal that price is looking to the opposite of what you are thinking anhd in fact looking to go higher.

I have attached an example of what I am explaining below.

Safe trading,

Johnathon

Forex_School_Online · February 23, 2012, 9:52pm

jayjonbeach:

Well not in my years of trading, its more like 50%, and of course it does depend on what vehicles you are referring to as well (Gold in bull market, no so many pullbacks/backtests, too strong). It also depends on why the price broke out in the first place, if it is a very large Head and Shoulders pattern, like we have in Gold and the Eur/GBP, and you have a really strong breakout, such as both have done, then 60% of time or more you get no backtest.

Probably more importantly though you have to ask yourself, why, when a very dependable and prominent price pattern like this develops, why would someone not enter on a 5/15 min chart so as to not risk missing such a nice move? The pullback/backtest trades are excellent low risk trades, but there is a time and place for them, and IMHO, this is not one of them. This Head and Shoulders Price Pattern is a very important price pattern that traders watch for, and act on, and the result is often explosive as both here have shown. Furthermore, you can enter the trade with VERY low risk, just as the pullback trade. You can even place your trade ahead of time, so the neckline is at .8400, enter a buy order at .8410 or .8415, with a stop at .8390. Since T1 was .8500, you have a very nice RR trade of 1:5, how often do you get these? Not often enough.

It does come down to style, as I mentioned way back in thread, and after trading for years and experiencing the same things time and time again, I learnt that missing these trades was a mistake as the RR is just too good on them to wait.

===

So to the charts, this is how it all started, with the subsequent move after:

As you can see here, price has hit my first target of .8500 where I said I was going to take 50% off, which I did, and I also moved my stop up to just under the pivot I pointed out on the chart. I expect price to come down to the channel line closer to .8475, but will give it a bit more breathing room to try and stay in the trade. You can see price is hesitating here due to some resistance as anticipated (and there really was NONE before .8500 so there was never a reason to exit sooner), which you see on the next chart:

So my planned exit is .8550 for the remaining 50% of my position, due to past price resistance levels and that important trendline as well. This is a now a “free” trade, with nice banked profits and even if I get stopped out that is also profit, just not as high.

====

I am playing Gold much the same way, except the pattern on Gold and its implications are MUCH bigger, so I plan on staying in the trade much longer, if the market permits. Silver was one day behind gold and today Silver broke out in the EXACT same way as these other two trades and for the same reason so I am long Silver now as well. Silver has some more reistance overhead from a VERY important down trendline and my targets are much lower on Silver than on Gold.

Sadly, I missed the whole setup on OIL!!! Damn it. 4 days ago Oil had the EXACT same breakout, again from a HUGE HEAD AND SHOULDERS PRICE PATTERN! Target is $130 a barrel, damn it my car uses a LOT of gas and I don’t want this pattern to succeed! Anyway I had this pattern marked long ago and sadly forget all about it, BIG mistake. Why I did not write this down on my watchlist, too many charts I tell you, too many. So now, guess what, we have to HOPE for a decent pullback, after 4 days of solid rallying without looking back. We might get something, Oil is often not as strong as Gold, I’ll be surprised if it comes all the way back to the $103 Neckline, but you never know. Put it on your watchlist! (note to self, reduce charts, keep better updated watchlist)

Happy trading out there

Nice trading. I don’t think I could do it as I have a very simple mind but you seem to make it work for you!

nice work!

jayjonbeach · February 23, 2012, 11:51pm

Thanks Johnathon. I just wish I could duplicate myself, trying to watch so many charts is tough (have 3 monitors too and 2 are 27", guess I need 4!), no wonder robots are popular! LOL

The saying “a trader’s work is never done” is so true. Had I reviewed all my charts properly (fully) on the weekend I would not have missed that Oil trade, I am disappointed. These kind of patterns don’t happen very often at all, especially that big.

Oil’s Head and Shoulders stems back to MAY 2011, it is one BIG price pattern (and funny thing, it had a smaller version as part of the big right shoulder) so good news it might have a long way to run yet and it should give us a decent place to “hop on”, well good for trading, not so good for the ‘pump’ experience.

As Johnathon says, safe trading all

bhops · February 24, 2012, 12:44am

jayjonbeach:

Well not in my years of trading, its more like 50%, and of course it does depend on what vehicles you are referring to as well (Gold in bull market, no so many pullbacks/backtests, too strong). It also depends on why the price broke out in the first place, if it is a very large Head and Shoulders pattern, like we have in Gold and the Eur/GBP, and you have a really strong breakout, such as both have done, then 60% of time or more you get no backtest.

Probably more importantly though you have to ask yourself, why, when a very dependable and prominent price pattern like this develops, why would someone not enter on a 5/15 min chart so as to not risk missing such a nice move? The pullback/backtest trades are excellent low risk trades, but there is a time and place for them, and IMHO, this is not one of them. This Head and Shoulders Price Pattern is a very important price pattern that traders watch for, and act on, and the result is often explosive as both here have shown. Furthermore, you can enter the trade with VERY low risk, just as the pullback trade. You can even place your trade ahead of time, so the neckline is at .8400, enter a buy order at .8410 or .8415, with a stop at .8390. Since T1 was .8500, you have a very nice RR trade of 1:5, how often do you get these? Not often enough.

It does come down to style, as I mentioned way back in thread, and after trading for years and experiencing the same things time and time again, I learnt that missing these trades was a mistake as the RR is just too good on them to wait.

===

So to the charts, this is how it all started, with the subsequent move after:

As you can see here, price has hit my first target of .8500 where I said I was going to take 50% off, which I did, and I also moved my stop up to just under the pivot I pointed out on the chart. I expect price to come down to the channel line closer to .8475, but will give it a bit more breathing room to try and stay in the trade. You can see price is hesitating here due to some resistance as anticipated (and there really was NONE before .8500 so there was never a reason to exit sooner), which you see on the next chart:

So my planned exit is .8550 for the remaining 50% of my position, due to past price resistance levels and that important trendline as well. This is a now a “free” trade, with nice banked profits and even if I get stopped out that is also profit, just not as high.

====

I am playing Gold much the same way, except the pattern on Gold and its implications are MUCH bigger, so I plan on staying in the trade much longer, if the market permits. Silver was one day behind gold and today Silver broke out in the EXACT same way as these other two trades and for the same reason so I am long Silver now as well. Silver has some more reistance overhead from a VERY important down trendline and my targets are much lower on Silver than on Gold.

Sadly, I missed the whole setup on OIL!!! Damn it. 4 days ago Oil had the EXACT same breakout, again from a HUGE HEAD AND SHOULDERS PRICE PATTERN! Target is $130 a barrel, damn it my car uses a LOT of gas and I don’t want this pattern to succeed! Anyway I had this pattern marked long ago and sadly forget all about it, BIG mistake. Why I did not write this down on my watchlist, too many charts I tell you, too many. So now, guess what, we have to HOPE for a decent pullback, after 4 days of solid rallying without looking back. We might get something, Oil is often not as strong as Gold, I’ll be surprised if it comes all the way back to the $103 Neckline, but you never know. Put it on your watchlist! (note to self, reduce charts, keep better updated watchlist)

Happy trading out there

Fair enough whatever works for you.

I was drawn to Johnathon’s style of trading because it was very similar to the same philosophy as my own which is pretty much to look for prominent horizontal levels and then wait for corresponding PA signals to confirm the trade.

We don’t tend to concentrate so much on head and shoulders patterns or pennant patterns etc. It’s more the horizontal lines that gets me in to trades. I’ll disagree slightly and say more often than not price does come back and retest the zones but maybe not just immediately.

I’ll be honest I don’t trade that much maybe, 4-5 times per month but typically I can have a win ratio around 80% and I find that works for me and my account grows accordingly.

And I’ll [I]always[/I] wait for a retest rather than playing a breakout. If price continues to scoot off so be it. There are enough pairs to watch and if I look at the 4 hour and the Daily that will give me more than enough opportunities to get my 4-5 good trades a month.

I guess it all comes down to your appetite for risk, how trading PA fits your personality etc, there is no wrong way and right if you are consistently profitable. As I say if it works for you great but equally what I do works for [I]me[/I].