Perfect PA setup

Last week was full of perfect PA setups on almost all pairs that i could lay my eyes on. Here is one on EURAUD. The first pic is the 1H chart for EURAUD. Now watch the price action on the move to resistance at around 1.7765 and then the move down to 1.7456. Do you see anything special ? No?? There is nothing special in it unless seen by trained eyes who can spot beautiful PA setups and money making opportunities.

This pair made through till it faced a strong resistance at around 1.7765 - 1.7822. Newbies would see this beautiful move up and be tempted to go long at the top. But have a look at the 4H chart and it shows lot of congestion in that price range previously. So unless this price range is broken either way, you should stay away from the trade. So, you wait. Waiting is very tedious but good trading is boring. It sure is. Then you see a breakdown thru the congestion region to the downside and you see a move to 1.7578. You are tempted again to go short. Hold on !! 80-90 % of the time, a break through a SR region will be followed by a move back into the SR region atleast one more time. Here the support has been broken but in the 1H chart, see the price move back into the support/resistance region.

Why does this happen ? Once the break in SR happens, the big guys push back the price into the SR region to tempt newbies and the small guys into thinking that there is going to be an upmove (in this case) and tempt them into buying again. So, you wait again. This move back into the SR region may take anywhere between a few mins to a few hours depending on the Tf that you trade. Now the price moves back into the SR region and again there is a fall.

You wait anxiously. The best entry is obtained on the break of the support from which the upmove into the SR region was made. In this case, the upmove back into the SR region started from 1.7595. So, you wait patiently for the break of 1.7595 and at one fine point, the break happens and the price zips through 1.7595. So, where do you enter ? Do you enter at 1.7594 or 1.7593 or 1.7592 or where?

Well, you wait for the support to be broken and price through support. Then, you switch to the lower TF. Watch the 15M chart. Here, you see price break through 1.7595 and move to 1.7555. But as in any other support break you can see price coming back up. You wait for price coming back to 1.7595 and then take a short there. Dont think, dont waver. Just short it. The break of support is confirmed by 2 things : The long bar on the break of support on 1H and the retrace and stalling at the support at 1.7595. If the break had been false, there will be not be any stalling on the retrace back to 1.7595, the price would just zip through 1.7595 and back into the 1.7610 region.

Once you have taken the short on the retrace, just sit tight. Dont waver. Since this has been observed on a 15M chart and this pair is quite volatile, you can be assuredof atleast 50 pips. Just sit tight and enjoy the pips. A perfect PA setup !!