Pure Price Action For Dummies

Beginner Questions Candlesticks, Chart Patterns, and Price Action
2658

Well first of all I make it a point not to read anything that has the word " programming", ‘neural networks’, data mining and automated. The moment I see anything along that line, i flip a page or browse for something else.

So, my knowledge about this is 0. I might not be in the loop of insider information.

But this is what I believe. The market is a closed system. At the end of the day, its finite, and if one person is gaining somewhere, than another is loosing elsewhere. Which is completely different from stocks or commodity. The big players, who use the market to change currency from one denomination to the other, and who hedge for protection against changing foreign exchange rates etc, end up looking for a balance. And most end up around that balance.

In such an ecosystem, an anomaly will quickly be swallowed by the market so that it can adjust itself to be back close to equilibrium. Unless the automated systems can learn by itself and adapt, as suggested by neural network purveyors, than most automated trading software or robots only have a short lifespan of profitability, assuming that they were profitable in the first place.

In other words, the edge of the automated system will quickly be neutralized by someone else trading with something else along the way.

This is apparent when I say the markets have been the same through out the years, but it changes.

Look at correlation for an example. I use to use it as one of my main entry rules. Now I am forced to abandon it altogether and adapt. The biggest weakness preventing automated systems from being very successful is its exacting and precise nature, with zero deviations from its programmed intentions. Which, unfortunately, also happens to be its biggest strength.

So an algorithm, which has decoded market movements will fail before a specific time period ,t, because of the very presence of the same algorithm in the market has changed things and the original algorithm can no longer be accurate. Now, the original algorithm cannot adapt to that. It is by nature, self defeating.

2660

Looks like all the bear lovers have abandoned EU and jumped on GU.

2661

EJ WEEKLY TF
Nothing very revealing in itself

EJ D TF
Wave in a wave in a wave in a wave. Support, when broken, and retested on a BPC, becomes resistance.

EJ H1 TF.
Why intra day trading is frowned upon by long term traders. The sheer mess of it, not to mention the number of false signals, and micro support and resistance areas makes reading tea leafs much more accurate.

So try to wean yourself off smaller TFs and pay more attention to the higher TFs. Opportunities are much lower, but its much much more safer.

Time to find a logical price wave to lock in some pips, and let the rest do whatever it wants.

2662

Missed out on euro aussie. Beautiful fall.

2663

I entered bit late but still managed to get out with 25 pips on EA.

2664

I like your entry.

Very nice trade, opened on the H1 pullback.

2665

as I remember, I signed EA a few days before. I even tried to get on the shorts, but always stopped out. and after it went above 1.31 I gave it up.
now I’m on the EG short with 50 pips:)
and I feel it’s more to happen this day soon.

2666

I know what you mean. By the time we cautiously wait for that fall, confidence is usually lost. Than lo and behold, it goes exactly how we thought it will.

2667

Hi Nikitafx, it’s a good thing that you advice me to wait for the signal to enter audusd chart yesterday. Now I can see that yesterday candle was buy, the bias for today is buy, I’m waiting for a pull back, if you checkout the chart H1, it seems that we have a pull back. Do I analyze it correctly?

PS : I don’t post the audusd chart here coz I don’t want to upset Bobmanic :slight_smile:

Thank you

2668

That really cannot be classified as a pullback yenny. Not in my books atleast.

We dont have a good signal on H4 nor daily. Matter of fact, daily is touching previous resistance area that was broken.

Personally, its close to taking a guess if I were to enter a short now.

So will it go down further on the next hour? It might. It might not.

P/s, sorry if my overly cautious approach is a pain in the ass, but loosing money not only reduces your account size, it also reduces your next winning trade cause now you have to cover back the earlier lost, which is a double penalty in my books. Stop loosing and you are already winning. Does that sound right?

2669

Ok, thank you, I think I have to watch closely the candlestick to get the entry signal right.

2670

I got to agree with Nikita on the AU thats does not appear to be a pullback in my book. Were are approaching yesterdays lows and in my opinion is a signal to sit out. Higher timeframe trend lately has been going south so it is my opinion (and only my opinion) to wait for this system to line up with higher time frame momentum. Meaning if the overall market direction is down then wait for sell signals. If yesterday was a buy take the day off. I find this system provides much better results if used in line with the overall trend of the market. Now with that said we have had a nice step decline in price so a retracement is imminent in the near future. So I would not say not to buy I am just stateing an opinion. But then my opinion on the AU is very biased. I am currently short.

2671

Hi Bobmaninc, thank you for the guide. So basically we have to see the overall trend, e.g. when I check D TF for EU, I can see it’s bullish. So it’s better to wait for yesterday “buy” candle as the first signal, then break down to smaller time frame to see any pin bar candle to confirm. Do I get this right?

2672

AU WEEKLY TF

Now the above is the AU weekly chart.

I have gone on to add next weeks ‘candle’ by myself.

See the blue line and the green arrows highlighting really big sharks in the water? its probably the same shark, just readjusting its position after the earlier breakout.

Well thats our telltale sign for a valid Support and resistance area.

So if we take that this weeks candle finishes in the current shape, than we can take it as a pullback candle. We will now wait for price to fall to the levels we have marked, producing a candle like my imaginary one.

Once this happens and we see a valid pullback in either the H4 chart, or better still had a buy candle on daily chart form here, than thats our signal to go long. Otherwise, we are still bearish, pending this weeks candle to finish forming.

2673

Hi Nikita, thank you for taking the time to explain this to me. Please bear with me and my newbie questions. I can see that the blue line was resistance line at the first green arrow, but after breakout, the blue line becomes support line (second green arrow). If this week candle formed just like the image above, can I consider that I’m looking at a pin bar here (long tail with small body)? a reversal signal so that next week we should go long, but we have to wait for the pull back candle (your imaginary candle) to form by checking lower time before entering the market.

Thank you.

2674

The weekly candle that is forming now can be taken as a pullback candle. So if next weeks candle forms the way I imagined it, than we look for further signs of price reversing and shooting up on the Day time frame and lower. This could be a multitude of candle patterns, including pullback, doji, hammer, shooting star, engulfing and what not. Ideally this will happen at the blue line.

But that is the gist of it

2675

I assume that you consider current week candle (bullish) as a pullback candle because the previous 4 candles were bearish? I’m having a nice hot coffee here and planning to re-read the posts in this thread to better understand how to trade smartly with price action.

2676

Not because the previous four candles were bearish. Its because its cause its got a tail.

2677

And there goes Nikita post an AU chart. Well if your candle forms I just might buy it :wink: we all know how much I love the 50% mark of the previous candles whick

2678

I’m a bit confused with the term here, somewhere in this thread you mention about Nial Fuller price action trading, so I checked out his website and view his videos. If a candle has a very long tail, I read that it’s called a pin bar or hammer or hangman, a sign of reversal but not always. In this week candle, I would say it’s a hammer. While a pullback candle, in my understanding is a retraced candle which usually occurs after a pinbar before making a big move. That’s why I assume that your imaginary candle for next week is the pullback, and this week candle is the pinbar.

If your imaginary candle for next week is fully formed just like that, then I would go long for the week after that, based on the pinbar candle form (this week). Do I make any sense? Thank you for taking the time to explain this to me :slight_smile: really appreciate it.