Price Action Sample defined

now, lets take ur chart.....lets look at the first highlighted portion...price has broken thru resistance...u think thats wonderful and u r itching to go long...but wait....the candle that broke thru the resistance was not a big one....the resistance has been strong so far and so if it has to be broken, u need lot of buyers to push the the price and so u expect a very long candle...but what u have is a small one...so lets wait and watch for other stuff...it is an area of previous resistance....i.e. not only is it a resistance cos MM level is there, it is a resistance cos there has been a previous high in this area..as can be seen on the left of the chart...so u stop and think again...in such cases, when a previous high is near a MM level, the indicator to go long is not the break of the MM level, but the break of the previous high....the previous high tells u that there has been a lot of sellers in this area...u want all the sellers to be overcome before u go long...u want to be with the big boys who push the prices past sellers...not with the small traders who get caught with false longs...

u see the price pushing thru resistance, then a small retrace and u see that price did not break the previous high after the retrace...and u see a pin bar as well...all signals for u to be careful and to wait b4 u go long...as expected the break thru resistance breaks down and down we go again....always look for previous highs or lows b4 u take a trade apart from seeing the MM levels....this would lead to u wasting many trades but u get money for the pips u make not the number of trades that u take...

now, lets move on to the second highlighted portion...this is pretty obvious as there is no clean break nor is there any retrace...its pretty obvious that it is going to go down...

now the third highlighted portion...a nice break on high volume....first point is good on our checklist...wait for a retrace and retrace happens....second point in our checklist is fine...but the retrace goes down below support !! a good retrace is one which goes to the nearest support available but this one goes below support...u have a previous high in this region and u wait for the retrace to come back and break the previous high...it never happens....and a bearish pin bar as well....that too with high volume...if this volume was buyers, the candle would close at the top, not the bottom..so all this tells u that the break is false...and down we go...

now the fourth...well, this one never closes below support...u have long wicks closing above support with good volume...all of which shows that there is good buying....so literally , there has been no break of support at all....surely not a short...maybe a good long.....


all the above would show u that learning PA is quite difficult...yes it is and it takes lot of practice....but it is like car driving...initially, u have to learn so many things....clutch, gear, brake, hand brake, petrol, oil, wiper, rear view, front view etc and u feel giddy...but once u have got a hold on everything, it automatically comes to u and after 2-3 yrs, u dont even realise that u are doing so many things...u r doing everything sub consciously....thats how i do it now...it was so much for me initially...retrace, support, resistance, break, low volume, high volume, pin bars, timeframes...soo many things....but now i can see stuff in a couple of minutes...any pair, any chart, any time...and i can tell u good trades from it....i see resistances, retraces, pin bars, volume, previous highs ...everything within 30 secs...

Daily Outlook for GBPUSD

Attached is the 1H chart of GBPUSD. It continues to have its wild swings. Yesterday we saw it moving up to 1.4950 and then it went down to its support at 1.47 and has now come back up again.

As you can see from the chart, we have strong support at 1.4770 and we have seen price hovering around this support for several hours now. The fact that this support has not been broken cleanly yet over the past several hours shows that there is good strength and hence we may have another leg up sometime today.

On the upside, we could have targets at 1.4850, 1.49 and then there should be stiff resistance at yesterdays high at around 1.4960 and then at 1.5 as it is a round number.

On the downside, we should have strong support at 1.4770, then at 1.47 and finally a strong support at 1.4648.

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Daily Outlook for EURUSD

Attached is the 1H chart of EURUSD. As expected, EU had a nice pullback yesterday and it went down to its strong support at 1.3184. After going down , it again managed to rise back which means that there could be some more strength in EU.

But there is huge resistance for its upmove at around 1.3360. This is a place which has several highs from a few days back and also much earlier and hence should provide a very strong resistance. But the way that EU has pulled back from its visit to 1.3184 makes me suspect that it could have some more strength left in it.

But i would not be thinking of any longs in EU unless and until 1.3360 is broken cleanly. So on the upside, the targets are 1.3305 and 1.3360 and if these are broken, we could go all the way to 1.37 over the next few days.

On the downside, the supports are at 1.3184 and 1.3123 and then at 1.3060.

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Daily Outlook for GBPJPY

GBPJPY has been going on with its upward march for the past few days with occasional break down to its support levels. As said in my article yesterday, GJ was good for longs today.

Attached is the 1H chart for GJ which shows the upward march. We can also see that the 1H bars which broke through the resistance at 144.5 were of low volume which indicated a break down to collect more buyers so that it can move up with force and with volume as well. The low volume also showed that not many buyers were interested in such high prices which means that lot of people felt that it has moved up too fast too soon.

So a healthy correction or retracement was required and thats what we finally got. GJ went down to its support and has since risen back again.

On the upside, it should face strong resistance at 144.8 and then it should move on to 145.3 and then to 146.88 where it should face some very stiff resistance.

On the down side , there is strong support at 143.75 and then at 142.2 though i do not think it would move down much below 143.75..

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Daily Outlook for GBPUSD

Attached is the 1H chart of GBPUSD. As pointed out yesterday, it was a good day for GU longs and it did manage to break through some major resistance. Today, we can see support at 1.4750 which has been proving to be strong support so far. On the upside, we should see the price moving to 1.4820 where it should face some strong resistance as it has been yesterdays high and a previous high as well.

If it does manage to break it, then there should be a clear ride to 1.4850 where it should face some minor resistance and then 1.49 where there should be some major resistance to price moving up further. I doubt whether price will move up further but if it does, then the next targets would be 1.4950 and then 1.5.

On the downside, there should be strong support at 1.4730 and then if it does get broken, it should go down to the next strong support at 1.4648 and then 1.4526.

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Daily Outlook for EURUSD

Yesterday proved to a very interesting day for the Euro and other currencies as well. Attached is the 1H chart of EURUSD. You can see that the price kept bouncing up from the support at 1.3245. This is an ample indication that there was some strong buying there and a cue for us to go long. Then price finally broke through and went up to as much as 1.3340 which is a region of previous resistance.

Almost on cue, the price started dropping back and this was a good place for us to go short. The area of previous resistance and the fact that the price started dropping back was enough indication for us to go short. Price went down to region of previous support at 1.3245 and kept bouncing from support and this was again an indication to go long.

Anyway, now price is caught in the range between 1.3345 and 1.3245 and seems to keep moving up and down. There is a huge list of news today and i somehow feel that the euro will go down further today.

On the downside, the targets are 1.3245 which should serve as strong support followed by 1.3184 which is also a region of strong support and then 1.3123.

On the upside, there should be strong resistance at 1.3345 and then at 1.3370 but i doubt whether price will reach there.

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Intraday outlook for EURJPY and GBPJPY

As can be seen from the attached charts , both EJ and GJ are hitting against very strong resistances. I had said in my thread in FF that today would be an up day for the JPY crosses and it has proved to be right so far.

GJ will be facing stiff resistance at 143.75which has a previous high at that price. Break of that will open the gates to 144.5. The FOMC should have a major say in that i believe.

Likewise, EJ has strong resistance at around 129.2. A break of that should take it to 129.7.

We might see some ranging for some time before the news and i believe the news should then provide some direction and then expect some pullback during the asian session tomorrow.

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Daily Outlook for GBPUSD

GBPUSD has been a bit crazy over the last few days. It does not seem to be knowing where it wants to go and thats the reason for this craziness. yesterday, we saw a good dip towards its strong support at 1.4526 and then it started going back up again.

What is clear is that GU is now caught in a 150 pip range between 1.4526 and 1.4680 and unless one of these price regions break, we should be seeing more ranging.

Attached is the 1H chart of GU and we can see how it moved to its support at 1.4526 which was a previous low as well and then it started going back up. Now it has broken through its resistance at 1.4648 again and it is now acting as a small support. This price was a big SR previously but with it being broken several times either way over the past few days, it has now become quite a weak SR.

On the upside, the resistances would be at 1.4680 and then at 1.4710 and then a strong resistance at 1.4770.

On the downside, the supports are at 1.4648, a small one at 1.4587 and then a strong one at 1.4526.

Daily Outlook for EURUSD

Attached is the 1H chart of EURUSD. It shows the strong support at 1.3123 which has been supporting the price for the past few hours. The small bars which bounced off the support should have shown that there was some accumulation taking place. On cue, EU has moved up and is at a resistance right now as it is close to one of the highs. It should break through 1.3160 for more upside.

On the upside, 1.3160 should be first resistance and if that is broken, then there should be another strong resistance at 1.3185. This price region should be a strong resistance as it is a SR at higher TFs as well. If and when this is broken, then the next upside target should be 1.3250 which should be achieved easily if 1.3185 is broken.

On the downside, the first target would be 1.3123 which should serve as a very strong support followed by another strong support at 1.3060.

I believe that EU will continue its upward move after some retracement towards support at 1.3123.

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Daily Outlook for EURJPY

Attached is the 1H chart of EURJPY which again shows a beautiful setup which could have been taken in the morning of today. As you can, there was a period of 6-7 hrs which had very small bars but none of those bars broke the support at 126.56. The high during that period was 126.85. So, during any of those hours, if we had taken a long with a SL below 126.55, then that trade would have been worth atleast 70 pips.

The short bars show either accumulation or distribution taking place and there was going to be an impending breakout. Anyway, EURJPY seems very strong now and it has broken its resistance at 127.3 and looks good for more. There would be some correction / retracement as the London session approaches and the upside target would be 128.

On the downside, there should be very strong support at 126.55 and then at 125.8.

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Simple Price Action Trade on GBPJPY

Here is another beautiful PA trade that is so easy to spot and so easy to trade. You can trade cool with little pressure on yourself with such trades... Attached is the 1H chart of GJ...A nice clean almost pin bar at the high...add to it there is a previous high around the same price...Look at the volume...it is very high but the bar does not finish at the high inspite of the high volume.

All the above are clear indication that it is going to go down. All that you have to do is to take a short with a SL at the high. Very low risk with high reward potential. Now support has been broken and coming down and has yielded 30 pips so far. A similar setup can be seen in the GU chart as well which further corroborates our bearish outlook.

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Daily Outlook for EURJPY

Attached is a daily chart of EURJPY. Yesterday, it came down crashing due to the weakness in the JPY crosses and also the large weakness in the euro. But as you can see from the daily chart, there is big support at 125.6 and it will take a big effort to break this support.

If this support does get broken, then we should move down to 125 which is again a very big support even on larger TFs. If this support also does get broken, which i doubt it will, then we should start moving towards 122. This is a daily chart and so things will take a few days to happen.

On the upside, there should be resistance at 126.2 and then at 127. Finally, there should be strong resistance at 128. I expect ranging between 125 and 128 for a few days.

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Daily Outlook for GBPUSD

Attached is a 1H chart of GBPUSD. As can be seen from the chart, GU had a very nice recovery from its lows at 1.4520 and then made a big recovery towards 1.47. What can also be noticed is that the move towards 1.47 had lesser and lesser volume with very little volume on the highs. This clearly shows that buyers were not interested in higher prices. Atleast not yet. So, the fact that the high bar closed in its middle with low volume was confirmation that this pair was coming down from 1.47.

Now, the price is hovering around 1.46 and this has some good support here. I do not see a breakdown of this support atleast until the London session opens. There is also very good support at yesterdays low of 1.4526 and until this is broken, there may not be any more downside. If this support does get broken, it could go down to 1.4470 and then to 1.44.

On the upside, the targets are 1.4648 which is a huge resistance and then yesterdays high of 1.47.

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Daily Outlook for EURUSD

As pointed out yesterday in my article, EURUSD had a huge bearish breakdown. It broke down through some major supports with 1.3184 proving to be a strong support turned resistance. Today, 1.3060 should be a strong resistance and 1.2940 should turn out to be a strong support.

By the look of things, we should see a further move down towards 1.2940 and i do not believe that this support will be broken today. Hence, we might see a bit of ranging today with 1.29 as support.

Attached is a daily chart of EU where it shows that 1.29 had served as a good place of support with a lot of buying.

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GBPJPY on a 5M Chart

Attached is the 5M chart of GBPJPY with 1H MM levels drawn on it. This chart has been presented to show a peculiar type of PA called pin bars. This shows you how, using pin bars even on a 5M chart, you could make a lot of pips based on price action and just within a few hours of time.

In the attached chart, see the number of both bearish and bullish pin bars and just see how many pips you could have made. With the weakness in the JPY crosses, you would of course prefer to take the bearish pin bars rather than the bullish ones. All you need to do is take the trade with the SL just above or below the pin bars which gives you a very low risk. Also, pin bars in new highs or previous highs have a higher probability of success. Just simple, low risk trading.

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Intraday Outlook on EURUSD

As pointed out in my article today morning, EURUSD seems very weak today and 1.3184 has proved to be a very strong resistance which has been holding up right through the day. Today has been a bit of a surprise with such slow movements through the day.

Anyway, EURUSD is now threatening to break the support at 1.3120 and if it does, it should go to around 1.3060 and i dont see it going down much further than that with not much news in today.

Any retracement towards 1.3180 is a good opportunity for shorting and i have taken 3 shorts at various times today on this pair for 28, 28 and 29 pips...

Attached is the hourly chart showing the MM levels and also the bearish pin bar on approach to 1.3180 which shows the selling pressure at that level.

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Daily Outlook for EURUSD

Attached is the 1H chart for EURUSD. As can be seen, it has broken through strong support at 1.3184. This price is support on the higher TFs as well and hence a break of this suggests that EU is likely to go down further. The chart also shows a rounded top which is again a confirmation of the price going down.

The downside targets woukd be 1.3120 and 1.3060. I doubt whether it will go higher but the open of the Euro session might see a bounce before the fall resumes again. On the upside, it should face resistance at 1.3184 and then at 1.3250.

Let see !!

Daily Outlook for GBPJPY

Now lets move on to the beast GBPJPY. It has opened a bit bearish today but as pointed out in one of my earlier articles, it still has strong support all the way from 140.5 to 141.5. But each dip into this support region dries up more and more buyers who sit in this region to support the price. So, GJ needs to break out upwards sooner else it will start to fall.

As seen from the hourly chart, the support are at 141.4 and 140.6. On the upside 142, 143.3 and then 144. GJ has been ranging between 140.5 and 144 for a few days and hence a breakout should come soon and this breakout should be big..

Outlook for GBPCHF

Ok then. Lets get back to the trading now. First, lets pick up on the pair which is quite interesting usually and is at a crucial position right now. Attached is a daily chart of GBPCHF and as you can see, it has strong support at 1.6600. It is at 1.67 currently and looking at things, i believe that the support should hold for now.

If the support does manage to break, it should go to atleast 1.63 and then on to 1.61. But i really do anticipate a bounce from this price and this bounce should take it to atleast 1.6850.

With lot of news coming in, it should be an interesting week !!

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Relaxing while trading !!

I thought i would write up the article on a weekend as it is on a topic which everyone is supposed to be doing over the weekend i.e. Relax !! This might seem a very trivial and boring topic to most but as everyone knows, more than the charts, the technical stuff etc. , it is the trading psychology that matters. The mind is the one that matters during trading. So it is very important to have the mind well rested and ready.

I have seen many traders and have experienced it first hand as well that unless your mind is free and well rested, you simply cannot make the right trading decisions. Traders should not be like hackers where they sit in small , dim lit rooms trading 16-18 hrs a day, having their food at the computer table, munching on snacks, colas, juice, all at their computer table. We have to understand that there is life beyond trading. We trade and we earn money to enjoy life. Not only do we need to enjoy life, we need to use trading and the money earned from that to make life enjoyable for people around us like our friends, family etc. So in such a case, what is the point in spending 16-18 hrs a day at the computer table, talking very less to friends and family, not spending enough time with them and making them unhappy and dissatisfied ? If the people around you are not happy, what is the point in earning thousands of dollars per week through trading ?

So, you need to relax, you need to have a social life and you need to spend time for yourself and also for friends and family. I see traders spending a large part of their weekend as well trying to read more and more, come up with strategies, studying charts for several hours etc.

The idea is to keep things simple. Trading is simple. We are the ones who make it complicated. Once you have understood price action and how and why price moves, then there is no need to keep working on systems, keep studying charts all the time. Price action is the only thing that works always. So, if you have understood price action and if you have imbibed it and this, along with good money management, along with a clear mind, should ensure that you trade well and earn well.

And be clear in your mind about your targets. Be clear on how much you want to earn per day and where you want to be six or 12 mnths down the line. Unless you have a target, you tend to over trade and you lose control. The logic is simple, the more trades you make, the more likely that you are going to make mistakes. As i keep repeating , 50 pips a day on a consistent basis should give you a very good income within a year even if you start with just $500. This translates to 250 pips a week for swing traders. For scalpers, 50 pips can be easily achieved with just 2 trades a day and within 2-3 hrs. For swing traders, 250 pips a week can be made in 2-3 trades in a week. That does not stop you from trading more or making more but what i am trying to say is that dont force yourself to trade more and more giving up most of your free time. Take trades as they come. Dont go in search of trades. Good trades will jump our of the charts for you. You need not go in search of trades with a lens. If you have good small targets and learn to relax and condition your mind, you will trade in a relaxed manner and without pressure and this is a sure way to success...