Hello Josh,
Glad you liked the videos. I’ll be posting weekly and daily commentary here, along with building the material so good to have you here.
Kind Regards,
Chris
EURUSD
Gaining for the last 3 out of 4 weeks, the EURUSD was bolstered by the EU summit as Germany and Frau Merkel caved for now on the ESM support mechanism. This lifted risk on, along with the Euro which formed a weekly pin bar and cleared an important hurdle of resistance at 1.2632 which was the Jan. 2012 lows. Near term resistance is close by about 70pips north of here and last weeks high at 1.2746. If this is cleared, expect short term bullish momentum to continue up to 1.2822 and 1.2913.
However, we expect there to still be plenty of bears in the market looking to sell any rallies, with these being key gravity points for them to enter. In reality, nothing has been solved as Spanish banks are still in trouble sitting on a pile of bad real estate mortgages, yields are still high for the Italian and Spanish bonds, and the prior bailout effect lasted roughly a day before the hangover settled in, so we are skeptical until we see continued strength. So watch for intraday price action triggers here to short if the movement starts to weaken into these levels.
AUDUSD
After finding support at the parity level and the Kumo bottom, the Aussie outperformed in the risk on friday via a large engulfing bar. In the process, it also formed a Kumo Break to the upside, which it has not seen since early March this year. In doing so, it took out the key 1.0230 area resistance while the Chikou Span also cleared the Kijun. After 1.0315, the pair has some decent upside play until 1.0384 which the chikou may run into some stickiness around the Span A.
Beyond this, the next layer of resistance would be at 1.0442. Short term pullbacks into the Kumo will likely find support around the rising Tenkan showing momentum is starting to build for the Aussie. In terms of Ichimoku Time Theory, the pair has not formed a full period yet, which would happen around the end of this week so we may see weakness then and look for possible intraday shorts.
USDCAD
Forming a potential 1-2-3 reversal, the Loonie strengthened massively vs, the greenback on friday and is on the verge of completing the 1-2-3 pattern. The pair needs to take out the prior SL (swing lows) at 1.0156 which was the June low this year. Should it do this, we will watch for a breakout pullback setup, expecting intraday sellers to come in, along with technical models taking profits so some short term selling opportunities near by. From here, we expect selling to continue down towards 1.0050 which was the 3mos range high so watch for intraday buying opportunities if the market shows weakness heading into these levels.
Gold
After showing exhaustion towards the end of last week, Gold formed an intraday pin bar reversal setup before launching on a $55 run. You will notice this formed right before the EU summit. It is very common to see price action triggers form right before a key economic event. Many of our price action traders got into this so hopefully you spotted this setup as well. The shiny metal should be encountering resistance first at $1612 and then later just shy of $1640 where we will look for a possible fade as gold has yet to break these levels since early May this year.
Hey Bob,
I was trying to be sarcastic. I actually meant that he doesn’t derail stuff.
My apologies to yunny1!
Oil
Climbing massively last week as the false break pin bar led to a $7+ run in the commodity, Oil found new support today on the news that Iranian lawmakers have drafted a bill proposing a blockade of the Straits of Hormuz. This obviously would provoke a response in the West, but the obvious follow through is strong upside gains for Oil. After last weeks impulsive spike to end the week, Oil sold off in a corrective fashion for 16hrs to start this one off.
However, the news dominated the end of day moves and Oil formed a piercing bar at a key $82 support, which virtually erased the prior aggressive selling. We feel Oil short term will likely benefit from the news and will continue to make another leg up attempting to form a medium term bottom. Bulls can take short term dips to $82 with tight stops below, targeting $84 and $85.30. A break above here challenges strong resistance at $87. Bears can look for possible weakness to short at $85 and $87.
Global Market Commentary:
As we get closer to the July 4th holiday in the states, volume out of the global markets was noticeably light today as the NYSE had its lowest volume day in over a decade along with avg. trade sizes in the S&P quite low for the year. Expect this to continue till after the holiday of fireworks. That combined with their being three rate decisions this week (RBA, BOE & ECB) and its unlikely we will see massive positions being taken prior.
But there was some solid activity today in the Euro which seemed to wake up from its EU summit hangover (which we wrote about would happen soon) as it fell vs. the greenback about 100pips on the day from a high to low basis. Speaking of the Euro, with the ECB rate decision this Thursday, watch for any talk of fresh stimulus measures (read bailout out failing banks). Failure to announce this will likely hurt the EZ picture even further.
US manufacturing contracted in June for the first time since the summer of 09’ suggesting the recovery and ongoing sensitivity to negative US economic news.
Upcoming Economic Announcements:
CNY Non-manufacturing PMI 01.00GMT 21.00EST
AUD Reserve Bank of Australia Rate Decision 04.30GMT 00.30EST
GBP Purchasing Manager Index Construction 08.30GMT 04.30EST
EUR Euro-Zone Producer Price Index (YoY) 09.00GMT 05.00EST
USD Factory Orders 14.00GMT 10.00EST
***NOTE - because of the coming holiday on weds, I will not be writing a market commentary tomorrow.
BUT - in times like these of low liquidity, it is always a good time for study, so I will be publishing a new article tomorrow morning so stay tuned.
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Impulsive and Corrective Price Action
Since I’ve already built up the very basic approach to my working theory of price action trading, I will build upon this by talking about impulsive and corrective price action moves.
If I had to look at price action as a structure, it would be a pyramid, with the base being how price action is a reflection of order flow (particularly executed transactions). The next part (or level above) from that base would be understanding price action through the lens of impulsive vs. corrective moves.
I will briefly describe what impulsive and corrective moves are, giving the key characteristics of each type of move. Then I will discuss what they generally communicate from an order flow perspective. After this I will talk about what is the general pattern they will form, and how you can use this for your trading.
What Is An Impulsive Move?
An impulsive move is one whereby the market moves quite strongly or heavily in on direction, covering a great distance in a short period of time. These moves tell you when the imbalance between the buyers and sellers is really strong and there is heavy participation from the institutional side.
Logically, more money can be made during these impulsive moves, as they cover more points or pips in less time. They are generally more volatile, and thus provide us with great opportunities to get more R (reward) with less risk since the market will stretch more easily in one direction. But no matter what, we want to be trading with these moves as much as possible, not against them.
Three Characteristics
Impulsive moves tend to have three characteristics common amongst all of them. These three can help clue you in to when an impulsive move is starting, or in play. They are;
- Large Candles (bodies)
- Mostly of one color (blue/bullish, or red/bearish)
- Closes towards highs/lows of the move
Let’s examine all three points.
- Large Candles communicate to us there is strong participation and order flow behind this particular candle. Strong imbalances during a candle will translate into larger candles than the norm. When you see large candles forming consistently in one direction, they indicate strong order flow behind them from the institutional side. Since the larger players are behind them, they give us a clue of the direction we want to take, essentially surfing the waves they (institutional) are creating. Take a look at an example below.
Image 1.1 – EURUSD 1hr Chart
Notice how in this chart, the candles that stand out the most are the red ones, particularly the ones towards the top left? They are the largest in this entire series, communicating strong order flow behind them.
In fact, if you look at candles 1-8, all but the blue doji in the middle are solid in size. Yet candles 9-17 are all contained within the highs and the lows of last 2-3 candles in this down leg, communicating weak order flow and participation behind them.
As a whole, impulsive moves tend to have large candles (bodies and wicks) behind them.
- Mostly of One Color – this ingredient is also common amongst impulsive moves as it communicates something critical to us – time. More specifically, how the bulls or bears were able to maintain control of the price action over time.
In the chart above from image 1.1, you will notice in the down leg, there is only 1 blue candle, meaning for 8 out of 9hrs, the bears had complete control of the market (almost one full trading session).
By maintaining control over time, the market is communicating who is the more dominant side because they are not allowing the other to take control of a candle for that time period. The greater the imbalance is between the bulls and bears over time, the greater the dominance is from either the bull or bear side of the market.
It is important to look at price action not just based on structure of the candles, which is one dimensional. Price doesn’t just move in a vacuum, it moves in time, and HOW price moves over time can communicate a lot of information to us as traders.
- Closes Towards the Highs/Lows of the Move – If you think about it, when the market is in a strong trending move, let’s say using a 4hr chart, and the candle that closed in the direction of the trend (in this case uptrend) has a very small wick, thus a strong close towards the highs, what does that communicate?
It should communicate that there is very little profit taking from the players behind that candle. If they were worried going into the close of that candle about an upcoming resistance level holding, or perhaps the bears may take control of the market, they would likely close their position, or take profits right before the candle closed.
But when you have a strong close with a very small wick, this usually indicates very little profit taking, thus a confidence the move will likely continue. This is highly useful to us as traders, and will be common amongst impulsive moves like in the chart below.
Image 1.2 GBPUSD 4hr Chart
Starting with the top left of the chart using candles 1-4, the price action moves in a sideways corrective fashion until candle 5, which if you notice, increases in size tremendously (rule #1 of impulsive moves). From here, price continues on selling for the next 9 candles, 10 total in a row, or 40hrs of selling (rule #2 of impulsive moves).
But looking at the candle closes, you can see most of them are towards the lows, showing very little profit taking along the way, thus suggesting likely continuation.
Only until candle 11 do we get a strong rejection, and from here price then moves sideways in a corrective fashion until candle 16. But what happens at candle 17? The candle expands (rule #1) telling us the trend will likely continue.
So these are three examples of the common characteristics of impulsive price action moves.
What About Corrective Moves?
The good thing about corrective moves is they are easy to spot, since they have the inverse characteristics of impulsive moves. Meaning, they tend to have;
1) Smaller Candles
2) Greater mix between red/blue or bull/bear candles
3) Closes more towards the middle with larger wicks
Thus, if you apply the logic of impulsive moves, you can easily understand and identify corrective moves.
How Do They Relate to Each Other?
Generally, impulsive and corrective moves tend to have a common pattern or dance with each other. The general pattern that tends to play out between them is the following;
-
Impulsive moves about 75% of the time are followed by corrective moves. These corrective moves can either be horizontal, slightly against the impulsive move, or even slightly in the same direction, but they denote a change in the order flow and participation.
-
75% of the time, these corrective moves are followed by impulsive moves in the same direction as the original impulsive move. Why?
Because those who are in control, rarely give up control unless encountering a strong counter-trend force. Even then, they usually make a second attempt to take out a recent swing high or low before giving up.
Only when they fail a second time will they usually exit the market, either waiting for a new chance to get in on a pullback, or reset completely. This is why V-Bottoms are quite rare and only form about 10% of the time. Usually there is a 2nd bottom, which is could be a LL (lower low), HL (higher low) or a similar low.
- This series between the impulsive vs. corrective moves will generally continue until the market encounters a counter-trend impulsive move, which usually translates to an equal or greater force on the opposing side of the market. Very similar to Newton’s Laws of Motion about an object in motion will stay in motion until acted upon another object with equal or greater force.
Let’s look at an example below.
Image 1.3 AUDUSD 4hr Chart
Glancing at the chart above starting with the bottom left at move A, you can see how it was an impulsive move, followed by a corrective move (B). This series continued until…it hit a counter-trend impulsive move in G. It was only until here did the bulls finally relent control as the opposing bears took control of the price action with the bulls likely taking profit or exiting all together, especially after the low point from move D was taken out. Ironically, what followed move G, was a corrective move after, followed by the bears continuing the down-leg.
In Summary
This is just an introduction to how I approach price action, but it is highly effective for many things, such as;
-finding the right direction
-staying in the trend
-spotting great pullback opportunities to get back in with trend
-knowing when the market will continue and when the market is likely to reverse
-how to find some of the more profitable moves in the market (impulsive)
-knowing who is in control of the market
and more…
There are many other facets and subtleties to trading impulsive and corrective price action, but this is a good introduction to my base theory and model for trading price action. If you can learn to spot the impulsive and corrective moves in the market, they can greatly enhance the odds of your trades along with helping you spot key characteristics in the markets.
To learn more about trading impulsive and corrective price action, I have a ton of free articles and videos at 2ndSkiesForex
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[B][U]Has everyone gone to the moon?[/U][/B] l went away for a few days (to the sunny Isle of Man, an offshore tax haven where all the super wealthy store their gains from the markets: one day it’ll be me!!!) then come back to check a few threads and find this great article/post above and not one comment/reply/thank you note! Maybe everyone has migrated over to the 2nd Skies site?!
Anyway, great article Chris, so many thanks from me at least!
l have heard you explain all this before but you know what, l need to keep reminding myself of these simple but very powerful basic building blocks of PA.When l look through my charts at the weekend l just need to remind myself of what l am seeing in this very simple way and then base my analysis/trades on this, as many times l just over think things and get that paralysis by analysis everyone talks about.
Maybe l am a slow learner but l think its great for me to keep an eye on this thread and revisiting your PA teaching.
Thanks again Chris and hope your own travels are going well and you are having fun back in the English speaking parts of the world!
Hasta la proxima,
Miguel.
EURUSD
After bouncing from the yearly low gaining ground for the last 3 of 4 weeks, the EURUSD got hammered last week losing all the gains and selling off to test the yearly lows again. It should be noticed how one week of impulsive selling took out four weeks of corrective gains, telling us the sellers are still in control as the market is more apropos to punish the Euro (rightfully so considering the situation in the EZ). Keep in mind, this is on the heels of a Spanish bailout two weeks ago, and a ESM funding agreement from Germany, yet sellers dominate.
With that being said, either this last sell-off is exhaustive in nature, or the market is looking to push for more downside. I think the latter and am looking for further deterioration in the pair. At this point, i’m either going to wait to see if the market will remain weak at these levels, and then look to sell near the former yearly lows on a breakout pullback to the 1.2300 level. Option 2 will be to sell rallies up to the 1.2650 area targeting 1.2300 and then a further break. If bulls want to take a play, look for a price action trigger of the current levels or just above 1.2300.
USDCHF
On the other side of the coin is the USDCHF which is actually giving a slightly better signal, not only having gained for 4 of the last 5 days, but also taking out the prior yearly high at .9772 and opening this week pushing above it from the open. Short term, it needs to clear .9800, but should it do so, I’m expecting further upside so longs are possible just north of this figure. Corrective pullbacks to the .9675-60 levels are another option for intraday longs. Bears will want to see a price action reversal trigger here and failure above before selling.
Gold
The precious metal continues to be hampered on the upside from the weekly 20ema which continues to act as dynamic resistance. This and the $1625-1640 region continues to hold the upside, so bulls will need to clear this before adding new technical buyers. Although there has been no weekly close below $1571, buying at this level doesn’t work out from a risk perspective since the upside is still capped.
So I prefer buying in the $1550-1530 region with stops below $1525, targeting $1600, $1625 and a possible break above the 20ema for further continuation. Bears can meanwhile short off the 20ema with tight stops (being no breach above it since April) targeting $1571 and $1550. Keep in mind last week formed a pin bar setup so sellers can look for weakness heading into the dynamic resistance.
Oil
Although this commodity ended the week where it started, I am suspecting a medium term bottom is in place around the $78 base from last week. Although these recent gains were bolstered by rhetoric out of Iran and them blockading a key strait, I am looking for a higher low above the recent swing lows around $78, perhaps around $80.60/75 region.
If price pulls back here and shows weakness or does so in a corrective fashion, I will look to get long on these levels barring a price action trigger around here presents itself so bulls have a nice pullback level to take as the commodity still has yet to form a higher low to suggest further bottoming. Bears can look to sell above the recent pin bar rejection just shy of $89 which happens to be a nice role reversal level and ideal for possible selling here.
Oh come on, you’re just posting stuff from your website, that’s not on really is?
Impulsive And Corrective Price Action | 2nd Skies Forex
We get quite offended on BabyPips.com when posters do that, besides it’s all just been lifted from an Elliot Wave handbook.
any information on impulse and correction waves is extremely welcome here…thanks…i believe he is just laying down some basics for those of us who dont understand…
maybe this is too elementary for you purple patch…but not for me… i love this stuff.
Been there, done that, I loved it too at the time, until I realised low limited it’s value is to actually making a profit, but anyway that’s not the point I was making.
Hold on PP,a trading outlook for the week is a trading outlook, so what if you post it in a few places - different audiences get the benefit eg new folks checking out this thread for the first time can get an insight into how CC views the market…no harm in that, only good imho.
You have every right to be sceptical l know but CC is posting valuable info here. l have been trading for 3 years and had checked out the Elliot Wave+Bob Prechter stuff etc but never saw anyone explaining basic PA as clearly and concisely as Chris. Anyone reading this thread, especially newbies, will gain some benefit so while scepticism is your right wouldn’t it be better to save it for those threads which provide no real value and are not written by real traders?
Just my opinion of course.
First off, yes, the original concept of impulsive and corrective was part of EW, but they use it in a completely different way, and talk about how from a psychological perspective the market oscillates from confidence and aggressive moves (impulsive) to hesitation, timidity and uncertainty (corrective).
However, I think this is an improper way to look at it as the market doesn’t create impulsive and corrective moves solely for psychological perspectives…especially with the ES daily volume now being 91% algorithmic - where is the emotions in algos?
It doesn’t exist, and if you really look at how EW and Ralph originally used it, then compare it to mine, they are quite different. Im not saying my use of the terms is original, but how I use them in terms of price action is.
And where do you see Ralph talking about how the end of a trade is a counter trend impulsive move that takes out a prior SL or SH that created the LL or HH in a trend?
You won’t, that is because he never looked at the markets that way, nor formulated his EW towards price action this way.
So based on that, I consider my use of it, application of it, and understanding of it to be unique and different which I am happy to debate.
Kind Regards
Chris Capre
Founder
2ndSkiesForex
Weekly Price Action & Ichimoku Chart Outlook July 15th - 20th
EURUSD
After starting last week with a daily tenkan-kijun cross last week, the pair formed a bullish outside bar after a one section and one day move (using ichimoku number theory) which we had talked about last week in our forex market commentary. The last time it formed a bullish outside bar on the daily charts ironically was after a one section and one day move, and formed a bounce.
Although the tenkan is down, the kijun is flat and I am expecting a modest bounce either to 1.2281 or 1.2400 before the downtrend will resume. Thus, even though the Euro has been selling off every 2 of its last 3 days for some time, I’ll favor a pullback before selling at the aforementioned levels instead of taking a short on a break.
USDCAD
After trending strongly for the month of may, the loonie has been in a volatile corrective pullback for the last 45 days, selling off exactly 1 out of every 2 days. With the selling days being equal to the buying, yet losing ground, the bears are clearly in control. But I have to confess the structured nature of the pullback (being exactly even in selling/buying days) along with the channel are pointing to more retracement style pullback instead of a full blown reversal of the trend. This leads me to believe a continuation of the may uptrend is more likely.
However, analysis of the channel suggests that if it breaks down further and touches the channel bottom before hitting the channel top, then the bears could be wrestling control from the bulls and look to take out key support at 1.0051. Bulls can take longs on the channel bottom or towards the 1.0051 support level while bears can look at selling around the channel top around 1.0275 which is near the pin bar high.
AUDUSD
While many of the majors are struggling vs. the USD, the Aussie has been making some headway and is potentially staging a medium term reversal. From an ichimoku perspective, it has all the ingredients with the prior kumo break, tenkan and kijun clearing the cloud as well. Now it just needs the chikou to clear the kumo and the ichimoku picture will be strongly bullish. I wrote last week how I suspected a pullback was likely and that is how it played out. I’m interested in longs near the flat kumo around parity which may happen in the middle of this week. Bears can look to sell at last weeks high around 1.0350 which might form a chikou rejection around the senkou span A.
Oil
After forming opposite pin bars in back to back weeks, oil is offering plays for both bulls and bears on a short term basis so we are going to map out both sides. For bears, there is a nice role reversal level coming up right around $89 which was a pin bar rejection from two weeks ago so a potential intraday setup there. Bulls on the other hand have a nice intraday base to take longs with tight stops at last weeks line in the sand which is right around $83.84 as the commodity is potentially forming a HL (higher low) and thus a base for a medium term reversal so potential for bulls here as well.
While my trading team and I are mostly on vacation for the month of July, I wanted to write a brief article giving 2 key clues to understanding support and resistance levels, which is also a follow up to my prior article the best support and resistance levels part 1. If you can learn to understand these two key points, you will be able to detect key levels, when they are more likely to hold, and when they are more likely to be broken.
1) Prior History, Time Degradation, & Reactions to Key Levels in the Past
When analyzing to see if a level is one where traders are more likely to place trades around, we have to see how price reacted to those levels in the past.
Did price react very strongly to it in the past, say approach it one time, then reverse sharply off of it? If so, then its very likely the next time it approaches that level, traders will place orders around there expecting a similar reaction.
Why?
If price produced a very violent or strong reaction to it in the past, this was because a large amount of money was put on the line stating ‘this is the line in the sand, this is highly over-valued or under-valued and we are placing a large bet here’. When this happens, its the first institution to get in that has the highest chance for profit, because they are the first to try and reverse the pair, thus getting the best price. But they also carry the most risk.
Regardless, if their reversal attempt works, other institutions will catch wind of this, and attempt to get in as close to the rejection level as possible. It really becomes a race between the institutions who can get the best price so many vie for it. This helps to further fuel the rejection and create a stronger reaction.
Smart traders take note of this level producing such a strong rejection and will more than likely take a play off of it a second time expecting it to hold. If an institution placed a large amount of money at a key level, they will likely defend it a second time (along with others as well). So expect this level to hold.
But…the reaction the second time around is usually not as strong.
Why?
Because more people are aware of it the second time. If it was a support level that produced a violent bounce, the second time around the sellers heading into that level will take profit. This means there is less of an opposing force on the sell side, so when the market bounces, there are less sellers who have to exit and thus fuel the counter trend play.
A good example of this is below in the daily Gold chart
Chart 1.1 Gold Daily
Gold was in a strong uptrend for all of 2011, eventually reaching $1900 an oz after climbing 3 out of every 4 days from July into mid August. Looking at the chart above, gold sold off quite heavily after reaching the $1900 level, selling off almost $200+ in 3 days.
Notice how the second time it approached this level, it held, but took over 13 days to sell off the same $200 amount. The first reaction was far more violent, while the second more tempered. The level held just fine, but when you see these situations, expect the response to be not as violent but still providing a great trade opportunity.
So anytime you see violent reactions to a level, look to place a trade at that level, expecting it to hold and produce a similar measured move. Obviously, if the reaction happens on a higher time frame, there is a greater chance it will produce a similar reaction. Whereas on a lower time frame, this will probably be less likely so be a little more choosy when looking to make a play like this.
Other factors to consider besides the strength of the reaction when understanding support and resistance levels is if the level produced a breakout pullback setup, has held several times in the past, and how much time the market spent at those levels. All of these factors will determine if there is a good setup there at that level.
2) Current Price Action
So often when people talk about levels, they only focus on the past and seem to forget to look at how the price action is behaving in the present. Just because a level held nicely in the past doesn’t mean it will this time and you’ve probably experienced this, expecting a level to hold only to watch it get broken.
By learning to read the price action in real time, you can see if the market is approaching it with strength or weakness, impulsive-ness or corrective-ness, and then use this information to determine if a level will hold the oncoming assault or buckle forming a breakout or trend continuation.
Levels are just areas where traders place orders, but if the defenses of those levels are weak, they will not withstand the attack, so it is crucial you are always watching price action in real time to determine if this will hold.
Although I place my orders at key levels I think will hold, if the market is approaching it with several signs of strength, then I will consider waiting for a price action trigger at this level, or for it to hold before placing my order.
Below is an example of a key level that held in the past, but completely failed the second time with the market showing strength and signs it was going to fail.
Chart 1.2 EURUSD Daily
When the EURUSD started its massive sell off in late April, it did so in impressive fashion shedding over 600pips in 13 days with only one bull candle in the entire selloff. When it was approaching the yearly low (at B on the chart) around 1.2627 in 2012, notice how the selling started to pause going from really large impulsive candles to two small doji-like candles. The transition or change from large candles to small suggested hesitation on the sellers part heading into a key level they suspected might hold.
This weakness and hesitation was a good real time price action clue the market was likely to produce a bounce from the yearly low, and bounce it did, forming an engulfing bar which bounced about 150pips in two days. Many of our price action traders got in on this one, not only reading the weakness, but also using quantitative data on price action specifically for the EURUSD which communicated a likely reversal.
But notice what happens after a two day bounce - price then sells off aggressively again taking out the prior days lows and eating into over 75% of the two days’ gains. This communicated to us in real time the sellers came back in force and were making an aggressive attempt to take out the level. So this was a good price action clue not to place another buy order at this level.
Notice how after it broke, the level served as a key role reversal level which gives us an opportunity to get short and join the trend.
There are many other clues one can use to read the price action in real time to determine if the level will hold or break, but these are just a few hints you can look for, along with looking for price action triggers off these key levels and quantitative data to support your level as well.
In Summary
So these are just 2 key clues you can use to understand support and resistance levels. It is critical to understand specifically how the market responded to a level in a past to determine first if it is a good level to make a play on.
But, so many times I hear traders talking only about how the market reacted in the past, and not paying attention to how the price action is developing in the present - which is a real time communication to the underlying order flow behind the attack on the support or resistance level. By learning to read this, along with level 2 quotes, you can greatly increase your ability to understand and place trades around key levels, either using them for reversal plays, breakout pullback setups, or looking for potential breakouts around these key levels.
Hi Chris,
Just a point of info: just checked back and l don’t think Part 1 of this Support/Resistance article is actually on this thread, its on the Strategies thread over on your 2nd Skies site. l maybe be wrong, however, l just made the trip over and re-read Part 1 again and its most definitely worth searching out either here or over there. two great articles and both practical and highly useful. Many thanks and enjoy your break!
This certainly is a uniquely different way to view price action. Looking forward to reading lessing yet to come
This has been very good stuff so far, Chris. I’m enjoying this thread and appreciate your tangible examples of the market theory you’re discussing in your posts.
Hola michael ji,
Thanks for mentioning this
Not sure if babypips allows links to external sites, so just didnt post it
But thank you for pointing it out as its a helpful article for understanding my approach to support and resistance
Kind regards
Chris
Hello Forexpastor,
Glad you are liking it. I definitely consider myself to have a different and unique view to price action so hopefully it helps you learn to read and trade price action differently.
To be continued
Kind regards
Chris
Hello merchantprince,
Am glad you are liking it and the examples from my market theory as they are coming from examples either myself or my course traders are working with so hopefully thie gives you a good idea of how we approach the market
More to come
Kind regards
Chris