THE POWER OF PRICE ACTION FOR DAY SWING TRADERS - mechanical forex trading system

THE POWER OF PRICE ACTION FOR DAY SWING TRADERS ~ mechanical forex trading system

The power of Price Action analysis is its capacity to predict the formation of major market patterns across all Time Frames. We can forecast movements that will take place the next day or even in the next few months and prepare our trading plans to take full advantage of them ahead of other traders.

On Monday August 10th last week, the EURO USD was expected to provide a Bull Candle to indicate a Rally to the Resistance of a Pennant that was being formed. This Rally would complete the Support boundary and the Pennant Consolidation itself. 

DAILY CHART- EURO USD  

A pair of Double Bottoms were already given in addition to the the break of the Downtrend Line. This suggested that another Bull Signal would be given/needed to confirm the start of the move to Resistance and that a potential trading opportunity to go long was near. Two days later, this took place...

DAILY CHART- EURO USD  

...a strong Bull Candle Signal that offered traders up to 100 Pips of potential gains on that day. Not only would they have been able to predict this movement a few days in advance, they would have also seen this pattern in its early stages months ago in June this year...

DAILY MARKET UPDATE OF JUNE 23, 2015

(Provided to Clients)  

As you can see, the bearish and bullish waves that were predicted have now taken place. Although the bearish wave was actually larger than expected, traders would still have expected this U-Turn and rally to take place to complete the Pennant and temporarily end USD gains.

With this strong Daily Candle now given, traders on the 4 Hour Chart or lower would have been entering to go long to take advantage of the expected rally higher. However, based on the 3-Wave Rule that the Methodology in the Manual explains, this would have been dangerous.

The chart below shows that the uptrend on this time frame was very strong and that a Bullish Signal was given at the Uptrend Line to indicate the continuation of this rally. This would have been a natural expectation since U-Turns at Trend Lines are common entry signals especially if they coincide with Support areas.

4 HOUR CHART UPTREND

Nevertheless, as pointed out to traders in the Daily Market Update, entry at this 4th Setup was risky and should not be done based on that 3-Wave Rule. And as can be seen in the chart below, this decision proved to be the right one...

4 HOUR CHART VOLATILITY AND TRADING LOSSES

This 3-Wave Rule is crucial to avoiding pullbacks and periods of volatility that lead to these unexpected reversals (Pages 35 & 36). It can be seen across all time frames with strong trends and explains a large part of why trends will either pause before continuing or change direction altogether. 

Another important Price Action pattern that will prevent these types of reversals affecting your trades relates to Breakout Setups & Signals. We will often see a strong breakout candle from a Consolidation Setup that appears to signal the start of a strong move and large gains for us. However, if this Consolidation is too weak, the trade will not be successful despite the strength of the Breakout Candle. An example of this took place on the USD CHF Daily Chart where a very strong Bull Candle appeared to promise hundreds of Pips of profit in the days ahead. Again, the danger of this trade was pointed out in the Daily Market Update when that signal appeared...

DAILY MARKET UPDATE - AUGUST 4, 2015

...a warning that proved correct a few days later...

USD CHF DAILY CHART - SHARP REVERSAL

This reversal took out several Long Positions that were gradually being opened after that initial Bull Candle Signal. A similar scenario was seen on the NZD USD which was breaking below its Counter Trend Line (CTL) on the Daily Chart to resume its Downtrend. Despite the strength of this CTL that was being broken, the candles themselves were too weak to justify entry..

NZD USD DAILY CHART BREAKOUT

Yet, on the 30 Minute Chart, this appeared to be a strong enough Downtrend that would have led many to open short positions...

30 MINUTE CHART DOWNTREND

Once more, the market had other ideas due to the weakness of the Daily Chart`s Signals and what normally follows...

DAILY MARKET UPDATE - AUGUST 10, 2015

NZD USD DAILY CHART PENNANT

30 MINUTE CHART REVERSAL

The failure of these last 2 setups to lead to breakouts highlights the importance of Section 5 in Part 1 of the Manual, applicable to both Trends and Consolidations...

With the power of this Price Action Trading Manual in your hands, you will sidestep these traps of the Currency Market and focus on the Setups that offer the greatest chance of profitability. You will be able to identify the strongest Setups and Signals that lead to large breakouts...

AUD NZD BREAKOUT SETUP

...setting profit targets that maximize on the Pips captured...

...exiting comfortably ahead of sharp market reversals...

...avoiding moments of regret from holding trades longer than we should...

As you go through the Manual and begin to apply it to your trading, you will be the one in control of the Forex Market. With the Daily Market Updates and Videos that provide in-depth analysis, forecasts and explanations of market moves based on the theories and techniques never before seen in this book, Profitability and Long-Term Wealth will be yours.

START TODAY

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The Power of Trading Forex Using Price Action - intraday forex trading system

The Power of Trading Forex Using Price Action ~ intraday forex trading system

By Jim Buhs

It seems that most forex traders now are looking for the short cut, instead of using the oldest form of technical analysis: trading just using price action. Most traders though dont seem to be interested.

You can tell this is true by looking at any forex forum on the internet. What is it that you normally see on these sites? Usually its people that are talking about some system that has 40 moving averages or some forex expert advisor thats supposed to be the new holy grail.

Do you see whats wrong with this picture?

For one thing, traders must understand that all these kinds of indicators, like RSI or stochastics, are only good for letting you know what has already occured. If you want the ability forecast future movements in prices, then i strongly recommend nor using these indicators.

The other thing that these traders need to understand is that 95% of all forex traders lose money. If thats the case why would you want to be doing the same exact thing that every other struggling trader is doing?

Think about this from a logical perspective. Chances are traders that are on a forum are struggling with their trading. If that wasnt the case why would they even be there? Most truly successful forex traders dont have the time nor the inclination to hang out in a forex forum.

The real popular discussion on these forums are about the Forex Expert Advisors. For anybody that doesnt know what these are, they are basically trading robots. Developers use trading systems with lagging indicators so that this robot trades for you, while youre away.

You can see why this would be right up the alley of a new trader. After all who wouldnt want the ability to come and go as you please. You can go anywhere you want and in the meantime this robot is going to make you rich, right? Actually thats not the way it works.

Remember with expert advisors, youre asking something from a computer that 95% of all the traders in the world cant accomplish. Being that the forex markets are so new driven, do you really think that a computer is going to be able to quantify any kind of breaking economic news that comes out?

If you want to take the time to really understand the market I suggest that you clean out all your charts of indicators and just watch the price action for a day. Pull up a 30 minute chart and just focus on market movement. One thing will start to become real evident: There are patterns in the market that happen every single day. These are the patterns that can be used to predict future price.
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BREAKOUT CANDLE TAKEN OUT BY SHARP REVERSAL - ma forex trading system

BREAKOUT CANDLE TAKEN OUT BY SHARP REVERSAL ~ ma forex trading system

Last week, the EURO USD provided another example of how Consolidation Breakouts with Large Candles lead to False Breakouts -another "trap" set by the market.

In the Daily Chart below taken from the Daily Market Update of Monday August 24, you can see the Large Candle that attempted to start the breakout above the Resistance of the Consolidation...

However, as you can see in the note below the graph, I expected it to at least pause here before either moving sideways or reversing. A few days later, a sharp reversal took out that Bull Candle to start a False Breakout Reversal, taking us back inside of the Pennant...

This reversal is due to the fact that these Large Candles- as attractive as they are -hardly lead to successful breakouts. Across the Currency Market these signals, as well as what are known as Weak Candles, are notorious for either leading to sideways, erratic moves or pullbacks. Traders who are not aware of this can get caught by these reversals that appear to be strong enough to justify breakouts. 

They key is to distinguish between these candles and what are called Normal Candles. These are the ones that actually lead to successful breakouts and once you know their characteristics, breakouts become a lot easier to trade. After years of struggling with these trade setups, figuring this out was what I had to do...

Taken from " Successful Currency Trading With the Daily & 4 Hour Charts"

I cant tell you how much money was lost and time spent in identifying the right signals to trade, but it was worth it. This has made a big difference in my results and of those who now use it in their trading. 

Although this has example with the EURO USD has taken place on the Daily Chart, these Large Candles are seen across all time frames as well. It is not so much the size in terms of Pips but rather their appearance relative to the other Candles on the time frame being traded. So whether you are a Day or Swing Trader, they will appear on your charts.

Find out how to identify these Normal Candles and start trading profitably today!

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