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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