How would you trade this sequence?

For any price action traders out there I would appreciate your insight into this simple breakout style of trading.
My main method is looking for the sinusoidal shape on a chart and trading out of a support/resistance zone.
This type of movement:

In the image below, we get a break of a level and pullback with successive lower highs. Is this sequence telling me that there is less interest in price continuing higher and likely to break below again? Price keeps getting pulled back to the level but unable to break through.


Vice versa with below image? higher highs away from the support zone BUT price keeps getting pulled back to that level.


those are both good opportunities for long positions.

open a long position as close as possible to the support line.

to the first: you have to be aware that you habe 2 contradictoring signs. up and down. (check chart patterns vs. support and resistamce tactics then youll know what i mean). you can play it tight at the support line and watch it doesmt fall below the support too far (it will most likely fall below the support but that usually is only a test and it comes back up again very quick) but take care. if it drops strong through the resistance your log position trade idea is death. its also important in what time frame you trade. tge higher the timeframe in which you get these patterns/opportunities the more reliable it is.

the second is a more secure long which you can play very tight at the support line and initiate a long position which will go higher than the last swing high.

Great thread grantx!

Being slightly contrarian, I would argue that the little pullback for resistance before it breaks out on both pictures, could be within one timeframe (one candlestick) and what you are trading is a very simple break out of a bar? That’s the way I pick my entries in a nutshell.

Thanks for the input.
Just as an example here is what I am training the ol noodle to look for when scanning charts. It is becoming easier and quicker to spot now because its all I look for.


Looks pretty good to me.
Zooming out it could look like 3 or 4 bars going up…

You see a chart and instantly the human brain starts to make patterns and assumptions that might not really be there. Nothing wrong with that.

However, when you start putting more and more indicators, filtering for a move you cannot predict anyway, you end up trying to trade something that was never made to be precise number.

In other words, stop try asking the market for something that it cannot give.

Not saying that you are, it’s just me ranting a little bit…

As I notice you can enter into the trade when the price making higher low after breaking minor support. But how you set your profit target

Before I enter a trade I have areas that I have already identified on my chart. I simply aim for those areas. If I can get a minimum 1:2 RR target that is within easy reach then I take the trade. Pretty simple really.


I agree with you that the charts are random however I disagree with your stance that it is complete chaos (If I am understanding you correctly). I believe in fractal recurrence and it is evident everywhere.
When you look at price charts, movement from one moment to the next is completely random and impossible to predict, however… collate all those random movements into a different timeframe and patterns are revealed. You cannot deny this Grabowski. That is what we exploit as traders, the fractal recurrence of price.

If you see recurring patterns on a chart you cannot deny what is there because of your belief that our brains are ‘assuming’ patterns. If the evidence is there, you have to suspend your belief system and accept what you see as the truth.

Hmm I don’t see chaos in the charts. I think chaos as a negative sound in it, more like just random. Chart patterns are very appealing for people and traders in general. Btw there is nothing wrong with seeing these patterns, but if you dig a little further, it’s something that we inherent from our ancestors surviving and trying not to get eaten by a lion :slight_smile: Back then, you would rather be safer than sorry, right? hehe. However, that part of the frontal cortex (hippocampus… fight or flight part of the brain), really doesn’t fit trading or in our society today.
Long story short, scientists calls it Pareidolia / Apophenia which is your brain creating these patterns as a survival instinct.

The tricky part is that you will never be able to prove or disprove wether it actually has an edge. You can say that the results justify the means - it all depends on what you believe :slight_smile: