Pr

iceAct
ionTr
adi
ngCour
se
CHAPTER1:
  I
NTRODUCTI
ONTOPRI
CE
ACTI
ON
Toreal
l
yunder
standpri
ceacti
onmeansyouneedtostudywhathappenedint
hepast.
Thenobser
vewhatishappeni
ngi
nthepr
esentandthenpredi
ctwherethemar
ketwil
l
gonext
.

“
Regar
dlessofwhaty
oumayt
hink,
all
trader
sar
efor
ecast
ers,
justl
i
ket
heweat
her
man.
”

Theweathermanknowswher
ethewindisblowi
ngfrom,seesthehi
ghandl
owpressur
e
syst
emsf or
mingovert
hel
and,knowst
het emper
aturev
ariat
ion,
col
dfr
ont,
hot
fr
ont…y
ouknowwhatI ’
mtal
ki
ngabout,r
ight?

Thenwhatdoeshedo?Hewillsaysomet
hingl
ike“
tomorrow,theweat
heri
nEdinburg
wil
lbemostl
ycloudy
,sl
i
ghtchanceofshowerandpossi
blysunnyint
heaft
ernoon.
”

Howdoesheknowt
hat
?

Wel
l,f
rom st
udyingthepastdataandseei
ngwhatthecur
rentweat
hersi
tuat
ionisatt
he
moment(andthesedays,thei
rpredi
cti
onismor
ereli
abl
edueadvancedcomputer
model
sandweat hersat
ell
itesi
nspace).

Sot
rader
sar
eli
ket
hat
…

I
fwegett hedirecti
onwrong,wel
osemoney,
wegetitr
ight
,wemakemoney .Simpl
eas
that.Soever
ythingyouaregoi
ngt
oreadher
eisaboutt
ryi
ngtogett
hatdi
recti
onri
ght
beforeyouplaceatrade.

Bef
orey
ougetst
art
ed,
thesear
esomewor
dst
haty
oumayencount
er:

Long=buy

Shor
t=sel
l

Bul
l
s=buy
ers

Bear
s=sel
l
ers

Bul
l
ish=i
fthemar
keti
sup,
iti
ssai
dtobebul
l
ish(
upt
rend)
.
Bear
ish=i
fthemar
keti
sdown,
it’
ssai
dtobebear
ish.

Bear
ishCandl
est
ick=acandl
est
ickt
hathasopenedhi
gherandcl
osedl
oweri
ssai
dtobe
bear
ish.

Bul
li
shCandl
esti
ck=acandl
est
ickt
hathasopenedl
owerandcl
osedhi
gheri
ssai
dtobe
abul
li
shcandl
esti
ck.

Risk:RewardRati
o=i
fyour
isk$50inat
radet
omake$150thenyourr
isk:
rewar
dis1:
3
whichsimplymeansyoumade3timesmoret
hany
ourri
sked.Thi
sisanexampl
eofri
sk:
rewardrat
io.

Now,thenextchapt
eroft
hepri
ceact
iont
radi
ngcour
se,
youar
egoi
ngt
olear
nwhat
pr
iceacti
onisandlotsmor
e.

Pr
iceAct
ionTr
adi
ngCour
se 
CHAPTER2:
  WHATI
SPRI
CEACTI
ON
TRADI
NG?
Thi
sist
hebasi
cdef
ini
ti
onofpr
iceact
iont
radi
ng:

Whentr
ader
smaketradi
ngdeci
sionsbasedonr epeat
edpri
cepat
ter
nsthatonce
f
ormed,t
heyi
ndi
cat
et ot
hetr
aderwhatdirect
ionthemarketi
smostli
kel
ytomov e.

Priceacti
ontradi
ngusest ool
sl kechar
i t
spatt
er ns,
candl
est
ickpatterns,tr
endli
nes,
pricebands,marketswingstruct
ureli
keupswingsanddownswi ngs, supportand
resist
ancelevel
s,consoli
dati
ons,Fi
bonaccir
etracementl
evels,
pivotsetc.

Gener al
ly,
pri
ceacti
ontr
aderstendtoi
gnor
ethefundament
alanaly
sis-
theunder
lyi
ng
factorthatmovesthemarket
s.Why?Becauset
heybeli
eveever
ythi
ngisalr
eady
discountedfori
nthemarketpri
ce.

Butther
e’sonethi
ngIbel i
evey oushouldnotignore:majoreconomi cnews
announcementsli
ketheInterestRatedecisi
ons,Non- Farm Pay r
oll
,FOMCet c.(Ify
ouare
i
nterest
edintr
adingcurrencynews, checkoutthesenewst radingstrategies:inter
est
rat
es newsforextr
adingstrategy,
NonFar m PayrollForexTr adingStrategy &t he1
minutefor
exnewst r
adingstrategy)

From myownexper
ienceandf
rom whatI
’
veseen,Isayt
his“
ther
eleaseofeconomi
c
newscanbebothafri
endandanenemyforyourt
rades.
”

Her
e’swhatImeanbyt
hat
:
  I
fy oudi dtakeat r
adeinlinewiththeresul
tofeconomicnewsreleaseyoust and
tomakeal otmoremoneyv er
yquicklyi
nav er
yshortti
mebecauset herelease
ofthenewsof t
entendstomov epr i
ceveryqui
ckly
 eit
herupordownduet o
i
ncr easedv olat
il
it
y.
 Buti fyourtradewasagai nstt
henews, youcanwalkawaywithallyourprofit
s
wipedoutoral ossandt helosscanbehugebecausemar ket
scanmov esof ast
duringt hatperi
odthatthere’
salsothechancethatyourst
oplosscannotbe
tr
iggered.

Thechartbel
owshowsandexampl
eofwhatcanhappenwhent
her
eismaj
orf
orex
fundamental
newsrel
ease:
Thi
sisoneexperi
enceIwil
lnev
erfor
get
.Itr
adedaper
fectpri
ceacti
onset
up,
thetrade
wentasIant
ici
patedbutafewminut
esl
ater,
themar
ketdroppeddownver
yquickl
y.

Myst
opl
osswasnev
ert
ri
gger
edatt
hepr
icel
evelwher
eIseti
nit
ial
l
y.

Itri
edtocloset
hatt
radeasmanyt
imesasIcoul
dbuti
twasimpossi
blet
oclose
becausethepri
cewaswaydownbelowwher
emystoplosspr
icewas!Pr
icej
umpedmy
stoploss.

Ij
uststoodther
eandwat chedhelpl
essl
y.Aft
erwhatseemedli
keanet
erni
ty,
thet
rade
wasclosedbybrokeratt
hewor stpossi
blepr
i way
ce  -
way-way
-downbelow!

Thatsingl
etradenearl
ywipedoutmyt r
adi
ngaccount.Inst
eadofl
osi
ng2%ofmy
tr
adingaccount,Il
ostal
mosthalfofi
t.Idi
dnotunderstandanddi
dnotknowwhat
happenedthatnightt
omaket hemarketmoveli
kethat.Icoul
dnotsl
eepthatni
ght
.

LaterIf
oundoutt
hati
twasamaj
oreconomi
cnewsr
eleaset
hatmov
edt
hemar
ketl
i
ke
that.

From t
hati
nci
dent,
I’
velear
n’tmyl
esson,sobef
oreIpl
aceatrade,
Iheadovert
othe
forexf
act
orycal
endart
ocheckift
hereisanyhi
ghimpactnewscomingoutbef
oreI
placemytr
ades.

Ift
here’
savali
dtradesetupbutIfIseethatt
het i
mei sclosetoamajornewst obe
announced,
Iwil
lnotenter.Ther
eareexceptionswhereIwi l
ltakeatr
adeifIseethatI
canplacemystoplossbehindamaj orsupportorresi
stancelevel
.

Thehi
ghimpactnewsar
ecol
ourcodedi
nRed.That
’swhaty
oul
ookf
or(
seef
igur
e
bel
ow):
Her
e’swhaty
oucando:

1.Ifav ali
dt radeset uphappeni ng,checkwi thf orexfact ory.com t omakesur ethere
arenomaj ornewsannouncement stobemadesoont hatcani mpacty ourt
rade.
2.Ifthere’snewst ober eleasedy oucandot hese2t hings: don’ ttradeunt i
laf
ter
thenewsr eleaseandwai tunt i
lmar ketsstartst r
adi ngnor mal lyagain,orifyou
decidet ot rade, t
radesmal l contractsbecauset hemar ketisv eryvolat
ilewhen
thenewsi sreleased.Thi scanwor ksf oryouoragai nsty ou.Youneedt oknow
whaty ouar edoi ngdur ingt heset imes.
3.Ifyoual readyhav eat radet hathasbeenr unning( pr i
ort ot henewsr el
easetime)
forsomet i
meandi npr ofit
,t hi
nkaboutmov ingst opl osst ight erortakingsome
profit
sof fthattablei ncaset hemar ketgoesagai nsty ouoncet henewsi s
released.I nani deal case, youwoul dhav etakent hi st r
adeawhi leagoandt hat
thecur rentmar ketpr i
cei sfarawayf r
om y ourtradeent r
ypr iceandy ouwoul d
hav elockedsomepr ofitsalreadyandi fthemar ketmov esi nt hedirect
ionofy our
tradeaf terthenewsr elease, youwi l
l makeal otofmoney .
3Import
antReasonsWhyYouShoul
dBeTr
adi
ngPr
ice
Act
ion
1.Priceacti
onrepresentscol
lecti
vehumanbehav i
or.Humanbehav i
orinthemarket
createssomespeci fi
cpatt
ernsont hechart
s.Sopriceact
iont
radi
ngi sreal
l
y
aboutunderstandingthepsychologyofthemarketusingt
hosepatt ns.That
er ’
s
whyy ouseepr i
cehitssupportl
ev el
sandbouncesbackup.That’
swhyy ousee
pricehit
sresi
stancelevel
sandheadsdown.Why ?Becauseofcoll
ectivehuman
reacti
on!

2.Pri
ceact i
ongi vesstr
ucturetothefor
exmar ket.Youcan’tpredi
ctwith100%
accuracywher ethemar ketwil
lgonext.Howev erwithpri
ceaction,
youcan, toan
extentpredictwherethemar pot
ketcan  enti
all
ygo.Thi sbecausepr
si i
ceaction
bri
ngsstr uctur
e.Soifyouknowt hestructur
e,youcanr educetheuncertai
ntyto
someext entandpr edi
ctwi t
hsomedegr eeofcer t
aintywherethemar ketwil
lgo
next.

3.Pr i
ceActionhel psreducemar ket“ noise”andf alsesignals.I fyouar etradi
ngwi t
h
stochasti
corCCIi ndicator
set c, t
heyt endtogivet oomanyf alsesignals.Thi
sis
alsothecasewi t
hmanyot herindicat ors.Pr
iceact ionhelpst oreducet hese
kindsoffal sesignals.Pri
ceact ioni snoti mmunet ofalsesi gnal sbutitisamuch
betteroptiont hanusingotheri ndicator s…whichareessent iall
yder i
vedf r
om the
rawpr i
cedat aanyway .Pri
ceact ional sohelpst oreduce“ noi se”.Whati snoise?
Mar ketnoisei ssimplyallt
hepr i
cedat athatdistortsthepi ctureoft heunderlyi
ng
trend…thisi smost l
yduet osmal lpricecor r
ectionsaswel lasv olat
il
it
y.

Oneofthebestway
stomini
mizemar
ketnoi
seistot
radefr
om l
argert
imef
rames
i
nsteadoft
radi
ngfr
om smal
l
erti
mefr
ames.Seethe2char
tsbel
owt oseewhatImean:
Andnow, compar
emarketnoi
sei
nthe4hrchar
t(noti
cet
hewhi
teboxont
hechar
t?
Thatequatest
othear
eaofthe5minchar
tabove!
):
Smal
lert
imef
ramestendtohavetoomuchnoiseandmanyt r
ader
sgetl osttradingi
n
smal
l
erti
meframesbecausetheydonotunder
standt hebi
hatt gt
rendint helarger
ti
mef
rameistheonethatact
uall
ydr
iveswhathappensint
hesmallert
imef r
ames.

Buthavingsai
dthat,
Idotradeinsmall
ert
imef
ramesbyusi
ngtradingset
upsthat
happeninlar
gerti
meframes.Idothi
stogeti
natabett
erpr
icepointandkeepmystop
l
osstight.

Thi
siscaledmul
l ti
-t
imefr
amet
radi
ngandIwi
l
lal
socov
ert
hison 
Chapt
er16t
oshow
youexact
lyhowi
t’
sdone.

I
sPr
iceAct
ionAppl
i
cabl
eToAnyOt
herMar
ket
?
Theansweri
syes.Al
lthepr
iceact
iont
radi
ngst
uffdescr
ibedher
ear
eappl
i
cabl
etoal
l
market
s.

I
nhere,Iwi
ll
bemost l
ybetal
kingi
nter
msofusingpri
ceact
ioni
nt hecur
rencymarket
butasI
’vement
ioned,t
heconcept
sareuni
ver
salandcanbeappl
iedtoanyfinanci
al
market
.

Pr
iceAct
ionTr
adi
ngAl
l
owsYouToTr
adeWi
thAnEdge

Pr
iceAct
ionTr
adi
ngi
saboutt
radi
ngwi
t sat
hanedge.Whati radi
ngedge?

Well
,putsi
mpl
yitmeansy
ouneedt
otr
adewhent
heoddsar
einy
ourf
avour
.Thi
ngs
l
ike:

 Tr
adingwitht hetrend
 Tr
adingWithPr iceActionUsi ngreli
abl
echartpatt
ernsandcandl
est
ickpat
ter
ns.
 Tr
adingusingSuppor tandr esistancel
evel
s.
 Maki
ngy ourwi nnerslargert hany ourl
osi
ngtrades
 Tr
adingonlyinl ar
gertimef rames
 Wait
ingpatientl
yforther ightt r
adesetupsandnotchasingtr
ades.

Allt
hesekindsofthi
ngsabov
ehelpsyoutotr
adewit
hanedge.Theymaynotbeexit
ing
andprobablyyou’
vehear
dofthesebef
orebuthey
…thi
sst
uffi
swhatsepar
ateswinners
fr
om loser
s
WhatPr
iceAct
ionTr
adi
ngI
sNot

 Pri
ceact
iontr
adingwil
lnotmakeyouri
ch…butpri
ceacti
ontr
adingwithproper
ri
skmanagementcanmakey ouaprof
it
abletr
ader.Someofyouwillgothrough
thi
sgui
deandlearnandmakemuchmoneybutsomeofy ouwil
l f
ail
.That’
sjust
thewayl
ifei
s.

 Pr
iceacti
ontradi
ngisnotthehol
ygrai
lbuti
tsur
edoesbeatusi
ngother
i
ndicat
ors(mostofwhichoft
enlagandaderi
vedfr
om pr
iceact
ionanyway
!).

 Pri
ceacti
ontradi
ngwillnotmakeyouanover
nightsuccess.Youneedtoputin
thehardyar
ds,obser
veandseehowpr i
cer
eactsandseet hoserepet
iti
ve
patt
ernsandthenhavetheconfi
dencet
otr
adet hem t
heny ouwil
lberewarded
fort
hat.

I
fyouar
eoneofthoset
hatar
egoingtol
earnfr
om thi
scour
seandappl
yitt
oyourf
orex
t
radi
ng,
myhatsofftoy
ouandIsay“goandsucceed.
”

Char
tTi
me-
WhyI
tIsI
mpor
tant
Youneedchar
tti
metounder
standPri
ceAct
ion.Forsomeofyou,
itmayt
akeawhi
l
efor
yout
ounderst
and,whi
l
esomeofy oumaybev er
yquickt
olear
n.

Observ
et hepriceact
ionoft
hemar ket
. Gobacktot
hepastandseehowthemar ket
hadbehav ed.Whatcausedi
ttobehavethatway Youcannotbeaconf
? identpr
ice
act
iontraderunti
lyoudothi
s.

I
fyoucouldsi
mpl
yreadthechar
tswellenought
obeabl
etoenteratt
heexactt
imes
whenthemovewoul
dtakeoffandnotcomeback,t
henyouwouldhaveahuge
advant
age.
Tr
endli
nes,
specif
iccandl
estickpatt
erns,speci
fi
cchartpat
ter
ns,Fi
bonacci
ret
racement
l
evel
s&supportandresi
stancelevel
s…thesearethetool
sIusetotrade.

I
fyouputtheti
meandeffor
tint
olearni
ngthem,i
twon’
tbel
ongbef
orey
ouwi
l
lbegi
nto
under
standandseehowall
thesethi
ngsfi
ttoget
her
.

St
artl
ear
ningt
otadenakedpr
r iceact
ion.

Pri
ceAct
ionTr
adi
ngCour
se 
CHAPTER3:
  
UNDERSTANDI
NGMASSPSYCHOLOGYIN
TRADI
NG

Here’
sonethi
ngaboutpr
iceact
ion:
itr
epr
esent
sacol
l
ect
ivehuman 
behav
ior
 ormass
psy
chology
.

Letmeexpl
ain.

Al
lhumanbei
ngshav
eev
olv
edt
orespondt
ocer
tai
nsi
tuat
ionsi
ncer
tai
nway
s. 
Andy
ou
canseet
hishappeni
nthet
radi
ngwor
ldaswel
l
:

Thewaymul t
it
udeoft
rader
sthi
nkandreactform patt
erns…repeti
ti
vepr
icepat
ter
ns
thatonecanseeandthenpredi
ctwi
thacertai
ndegr eeofaccuracywher
ethemarket
willmostl
ikel
ygooncethatpar
ti
cul
arpat
ternisformed.

Forexample,i
fyouseeamaj orr
esistancelev
el,
pri
cehit
sthel
evel
andfor
msa
‘
shootingst
ar’abeari
shrever
salcandlest
ickpat
ter
n.Youcant
hensaywit
hagr
eat
er
degreeofconfi
dencethatPri
cei
sgoi ngtoheaddown.

Why
?

Becausether
ear esomanyt raderwat ngt
chi hatresi
stancel
eveland 
theyallknowt hat
pri
cehasbeenr ejectedfrom thi
slev
elonapr evi
ousoneortwooccasi onsandt hattel
l
s
them t
hatiti
sar esistancel
ev el
andthattheycanalsoseethatbeari
shreversal
candl
esti
ckformat on…andguesswhatt
i heywillbewaiti
ngtodo?

1.Theywil
lbewai
ti
ngwit
hthei
rsel
lorder
s…notj
ustonesel
lor
derbutt
housandsof
them,
somesmallandsomebigorder
s.

2.Butont heothersi
deoft hecoinisthattradert hathaveboughtatalowpr i
ceand
nowt hatt hepri
ceisheadingupt other esistancelevel
,that
’swheremostoft heir
takepr ofi
tlevel
sare.Sooncet heytaket heirprofi
tsaroundresi
stancelev
els,that
meanst herearenowl essbuyersnowandmor esell
ers.Thebal
ancet i
psinthe
direct
ionoft hesel
lersandthat’showt hepr iceispushedbackdownf r
om a
resist
ancel evel
.

Becausepr
iceact
ionisarepr
esent
ati
onofmasspsy
chol
ogy
…themar
ket
sar
emov
ed
bytheact
ivi
ti
esoftr
aders.

Sopri
ceact
iont
radi
ngisaboutunder
standi
ngt
hepsy
chol
ogyoft
hemar
ketusi
ngt
hose
pat
ter
nsandmakingaprof
itasaresul
t.

Ther
eare2typesofpri
ceacti
ontradi
ng,
t he100%Pur
epr
iceact
iont
radi
ngandt
henot
-
so-
purepr
iceAct
iontr
ading.
 Letmeexplain…

Pur
ePr
iceAct
ionTr
adi
ng
Purepr
iceact
iont
r ngsi
adi mpl
ymeans100%pr
iceact
iont
radi
ng.Noi
ndi
cat
orsexcept
pr
iceacti
onal
one.

Not
-So-
Pur
ePr
iceAct
ionTr
adi
ng
Thi
siswhenpri
ceact
iont
radi
ngi
susedwit
hotheri
ndi
cat
orsandtheseotheri
ndi
cat
ors
for
m par
toft
hepri
ceacti
ontr
adi
ngsyst
em.Thesei
ndi
cat
orscanbet r
endindi
cat
ors
l
ikemovi
ngaver
agesoroscil
l
atorsli
kestochast
ici
ndi
cat
orandCCI
.(Pl
easedon’
tgo
googl
i
ngCCIandstochast
ici
ndicat
ors!
)

Or
igi
nofPr
iceAct
ionTr
adi
ng
Charl
esDowistheguycr
edi
tedt
obet
hef
atheroft
echni
cal
anal
ysi
s.Hecameupwi
th
theDOW Theor
y.

Thetheorytri
estoexpl
ainmarketbehaviorandfocusesonmar kettrends.Onepartof
thetheoryi
sthatthemarketpr
icediscountseveryt
hing.Ther
efore,technicalanal
yst
s
usepricechart
sandchartpatt
ernstostudymar ketanddon’treall
ycar eaboutthe
fundamentalaspect
sofwhatmov et hemarkets.

Iwil
lcov
ert
hisal
i
ttl
ebitl
aterwhenItal
kaboutwhatar
etr
ends,
howt
rendsbegi
n(or
end)i
nChapt
er5ofthi
spri
ceactiont
radi
ngcourse.

CHAPTER4:
  PRI
CE ANDCHARTS
Now,let
’sst
udypr
icei
nalit
tl
ebitmor
edet
ai…t
l hi
sst
uffi
sfort
henewbi
es…pl
easeski
p
t
hissecti
onify
outhi
nkyouknow!

Whati
spr
ice?
Pri
ceisvaluegi
ventoapar
ti
cul
ari
nst
rumentusual
l
yinmonet
aryt
ermsandi
tsv
aluei
s
dependentonsuppl
yanddemand.

 Ift
hedemandismor e,priceincreasesasmor etradersstartbuy i
nganddrivi
ng
pri
cesup.
 Demandzonesony ourpr icechartsarearoundsuppor tlevels,thatswher
’ e
buyer
scomeandst artbuy inganddr i
vi
ngpr icesup!
 Ift
herei
sanoversuppl y,pr i
cefall
sast herearemor esellerandl essbuyer
s.
 Suppl
yzonesony ourchar tsar
eonandar oundresist
ancel evelswheresel
lers
comeinanddri
vet hepr i
cesdownduet hefactthatther
ear ev eryfewbuyers.

Ever
yti
meyouopenupy
ourchar
ts,
all
youar
eseei
ngar
ethef
orcesofsuppl
yand
demandatwor
k!

I
fthemarketisgoi
ngup,whatdoesthattel
lyouaboutt
hedemandandsuppl
ythen?I
t
meanst
here’salotofdemandfort
hatinstr
ument.

Orwhatifthemarket
ingisgoi
ngdownthenwhatdoesthattel
lyouaboutt
hedemand
andsupplyt Ther
hen?  e’
salessdemandandl
otsofsupply
.

Butt
her
e’ssomet
hingel
seaboutpr
ice…i
thasat
imecomponent
.
Sothepri
ceofsomet
hingt
odaywi
llnotbet
hesametomorr
owori namont
hori
na
y .Suppl
ear yanddemandovert
imedri
vesupanddownthepr
ice.

Buthowdoyourepr
esentthev
alueofpr
iceov
ert
imewhi
chi
ntur
ntel
l
syouoft
he
suppl
yanddemandforces?

Answer:Youneedpri
cecharts:pr
  icebars,
candlest
ickandli
nechart
s.These
ar gr
e  aphi
calandv
isualrepr
esentati
onofpriceoverti
me,thust
ell
ingyouastor
yabout
supplyanddemandforcesoveracer t
ainti
meper i
odwhichcanbe1mi nuteuptoone
monthory ear
.

3Mai
nTy
pesOfPr
iceChar
ts
Pr
iceov
eraper
iodoft
imei
sgr
aphi
cal
l
yrepr
esent
edi
n3mai
nway
s:

1.wit
habarchar t
2.acandlest
ickchar
t
3.orali
nechart.

Now,
Iwi
l
lgot
hrougheachonoft
hese3mai
nchar
ts…

WhatI
sABarChar
t?

Thechar
tyouseebel
owi
sabarchar
t.

Thosegr
eenandredthi
ngiesarecal
l
edbar
s.Thegreenbar
sar
ebull
ishbarswhi
ch
si
mplymeansthatt
heclosingpri
cei
shi
ghert
hentheopeni
ngpri
cewithi
ngacer
tai
n
ti
meperi
od.

Thoseredbar
sarebear
ishbar
sandthatmeanst
hatt
hecl
osi
ngpr
icei
slowert
hant
he
openi
ngpri
cefort
hatperi
odofti
me.
Thebarcharchar
tissimpl
ylooksli
kea“sti
ck”orbarwi
th2shortknobsonbothsi
des.
Theknobonthelefti
stheopeningpri
ceandtheknobonther
ightisthecl
osi
ngpri
ce.

Thent her
e’sthewickontheupperendandthelowerend.Thehighestpoi
ntorlevel
of
thewickont heupperendisthehi
ghestpri
cethatwasreachedduri
ngacer t
ain
ti
mef r
ameorper i
odandt hel
owestpointofthel
owerwickisthelowestpri
cethatwas
reachedalsoduri
ngt hesametimeframeorperi
od.

WhatI
sACandl
est
ickChar
t?

Thechar
tbel
owisanexampleofacandl
esti
ckchart
.Thecandl
est
ickchar
tconveysthe
sameinf
ormat
ionasi
nthebarchar
tabove,t
heonlydif
fer
enceist
hatacandlest
ick
char
thasabodyandabarchar
thasnotbody.
Acandlesti
ckchar
t…t
oputi
tinanot
herwayi
slkeput
i ti
ngabodyov
eraskel
etonoft
he
barchart
!

Her
e’sacompari
sonoftheBarchar
tvst
hecandl
est
ickchar
tandnot
ehowt
heyconv
ey
t
hesameinfor
mation:
That’
stheonl
ydif
fer
encebet
weenthebarchartandt
hecandl
est
ickchar
t…i
sthatt
he
candl
esti
ckchar
thasabodyandthebarchar
tdoesnot.

Theredcolouri
smostoftenusedtoindi eabear
cat ishcandl
est
ickwhi
chmeansthe
pri
ceopeneduphighandclosedlower.Agr
eencandlest
ickr
epr
esentsabul
l
ish
candl
est
ickandistheexactopposi
te.

WhatI
sALi
neChar
t?

Thisli
nechar
tbel
owisbasedont
hesamepr
icei
nfor
mat
ionast
hebarandcandl
est
ick
chartshownabov
e.

Asyoucansee,ev
enthough,
it 
conv
eyst
hesamepr
icei
nfor
mat
ionov
ert
imebutdoes
notr
eveal
every
thi
ng.
  Thelinecharti
soneoft heleastfavori
teofchar t
sf ort
rading.
 Alinechartissi
mpl ydr
awnbyconnect i
ngeithertheclosing,hi
ghorlowprice
andthat’
showy ougettheli
neonachar t.
 Li
nechar tscanbeusefulforlookingatthe“biggerpict
ure”andf i
ndi
nglongterm
tr
endsbutt heysimplycannotofferupthekindofi nfor
mat ioncont
ainedi
na
candlest
ickschart.

Outofthese3,hecandl
t estickchar
tisthemostpopularfol
l
owedbythebarchar
t.So
fr
om hereon,Iwil
lbeonlyfocusedoncandlest
ickchartonl
ybutImayendupusingt
he
wordbar tor
efertocandlesti
ckpatt
ernaswellsojustbeawareoft .
hat

Iwi
llt
alkmor eaboutt
hecandlest
ick(
andcandl
est
ickchar
ts)ast
hisi
sthebr
eadand
but
terforpr
iceacti
ontrader
s.

Thecandl
est
ick
 Thecandlest
ickcharthaditsori
ginsinJapanandcanalsobereferr
edt
oasthe
Japanesecandlest
ickchart.
 Thecolourofthecandlest
ickcharttel
lsyoui
fpri
cewasupordowni na
part
icul
arti
mef r
amewhi chmeanst hatcandl
esti
cksar
eeitherbull
i
shorbear
ish
Nowmostt rader
spref osetgr
ert eencandl
esti
cksasbul
l
ishandr
edcandl
est
icksas
bear
ish.AndIli
keitt
obet hatwayformepersonal
l
y.

 Somebr oker’
stradi
ngplatformshav eopt
ionswhereyoucanchangethecol
our
s
ofthecandlesti
ckstoanycol ouryouwant.I
fyouareawoman, youmaychange
abull
ishcandlesti
cktopink!Andbear i
shcandl
esti
cktoPurpl
e!(
Ihavenever
seenapinkandpur plecandlesti
ckyet)
.

Thi
scandl
est
ickshownbel
owi
sanexampl
eofbul
l
ishcandl
est
ick.

 ABulli
shcandl esticksimpl ymeanst hepriceopenedlowerandcloseduphigher
aft
eracer t
aintimeper iod, whichcanbe1mi nut
e,5minut
e,1hror1dayetc.
 Thecandlebodyr epresent sthedist
ancepr i
cehasmov edfrom t
heopeningprice
totheclosi
ngpr ice.Thel ongerthebody ,meanspr i
cehasmov edagreatdeal
upwardaf t
eropeni ng.Theshor t
erthecandlebodymeanst heexactopposi
te.
 Thehighist hehighestpr icethatwasr eachedduri
ngthatti
meper i
od.
 Thelowi sthelowestpr icet hatwasreacheddur i
ngthatt
imeperiod.

All
thesecandlest
icksshownbelowarebul
li
shcandl
estickswhichmeanthatthei
r
openingpr
iceswasl owert
hanthecl
osingpr
icesandtherefor
erefl
ectandoveral
l
uptr
endinthetimeframeeachcandl
esti
ckwasformed:

 
Now,
thecandl
est
ickshownbel
owi
sanexampl
eofabear
ishcandl
est
ick.

Abeari
shcandl
esti
cksi
mplymeansthatt
hecandl
est
ickopenedupatahi
ghpr
iceand
cl
osedloweraf
teracer
tai
nti
meperi
od:

Al
lthesecandl
est
icksshownbelowarebeari
shcandlest
icksmeani
ngthatt
heopeni
ng
pr
icewashighert
hantheclosi
ngpri
ce,t
heref
oreref
lecti
ngadowntrend:
Under
standi
ngBuy
ingandSel
l
ingPr
essur
eon
Candl
esti
cks
Didyouknowt hatt
herearebull
i
shcandl est
icksthatar
econsi
der
edbeari
shandbeari
sh
candl
esti
cksthatareconsi
deredbulli
sh?Tor eal
l
yunderst
andthi
sconcept
,youneedto
underst
andbuy i
ngandsell
ingpressure.

Yousee, everycandlest
ickt
hatisformedt ell
sy ouastor
yaboutthebattl
ebetweenthe
bull
sandt hebears-whodomi nat
edt hebattle,whowonatt heend,whoisweakeni
ng
etc.Allt
hatisrefl
ectedinanycandlesti
cky ousee.Thelengthofthebodyofthe
candlesti
ckaswel lastheshadow( orwick)t el
l
sy ouastor
yaboutthebuyingand
sell
ingpressure.

Forexampl
e,l
ookatt
het
wochar
tsbel
ow:
Lookatthef
ir
stgreencandl
esti
ckonthel
eftchar
t,i
t’
sabull
i
shcandlest
ickr
ight
?Yes.
 
Butyoucanseethati
thasav er
yshor
tbodyandv er
ylongwi
ck(t
ail
).

Itt
ell
syouthesel
lers(
bears)weredomi .I
nant ft
hiscandl
est
ickwastofor
m aft
erhi
tt
ing
aresi
stancel
evel
,itwi
llbeconsi
deredabeari
shsignalev
enthoughi
t’
sabull
ish
candl
esti
ck.

Now,
youcanapplythesamesortofl
ogi
ctoal
ltheot
hercandl
est
icksabov
eandr
ead
t
hest
oryeachoneistel
li
ngyou.

 I
ft heupperwi ckisv er yl
ong, itsimpletel
lsy outhatt her
e’salotofsel l
i
ng
pressur e.I
tmeanspr iceopenedandgotpushedhi gherbythebuy ersbutthenat
thehighestpr i
ce,sellersgoti nanddr oveitbackdown.
 I
ft helowerwi ckislong, ittell
sy outhatthere’salotofbuy i
ngpressure.Sell
ers
drovet hepricedownbutbuy ersgotinanddr ovethepr i
cebackup.
 I
ft helowerwi ckisshor t
,ittell
sy ourt
here’sv er
ymi ni
mal buyi
ngpr essure.
 I
ft heupperwi ckisshor t
,ittell
sy outhatthere’sver ymini
mal sel
li
ngpr essure.

Whataboutt
hel
engt
hoft
hebodyofcandl
est
icks?

 Thelongert
hebodyoft hecandleindi
cat
esveryst
rongbuy
ingorsell
i
ngpr essur
e.
 Ashortbodyofacandlesticki
ndicat
esli
tt
lepr
icemovementandtheref
oreless
buyi
ngorsell
ingpr
essur e.
  Somet imesthecandleswillhav enoupperorlowershadowsbutwi thveryl
ong
bodies.Thesear eint
erpr
etedt hesamewayasst andardcandlest
icksbutarean
evenst r
ongerindicat
ionofbullishornegati
vemar ketsenti
ment.
 Inthecaseofbul li
shcandle,pricesneverdecl
i
nebel owtheopen.I nthecaseof
bearishcandle,pri
cenevertradeabov etheopen.Seebel ow:

 
Now,sofarwehavelookedatindi
vi
dualcandl
est
icks…whati
fyoucombi
nemor
ethan
onecandl
esti
cks?Whatdoesitshowyou?

 Well
,onei
mportantt
hingthatgroupofcandl
est
ickcanshowyouishowst
rong
orweakabull
i
shorbearishmov eis.
 Theycanal
sotell
youifthebull
i
shorbearishmoveisweakeni
ng.
 Thewordusedtodescri
besuchasi t
uati
onismomentum.

Thechartbel
owshows3bear
ishcandl
est
icksi
nadownt
rend,
eachwi
thdecr
easi
ng
l
engthandbodyl
engths.
Ina downtr
endsit
uati
on,
wheny
ousee
suchhappeni
ng,
iti
sonesi
gnalt
het
hatdownwar
dtr
endisweakeni
ng.

Andift
hishappensaroundsuppor
tlevel
s,youshoul
dsitupandtakenoti
ceandalso
watchf
orbull
ishrev
ersalcandl
est
ickswhichwil
lgi
veyoutheconfi
dencetobuy!

Thef
oll
owingchar
tbel
owshowsyouanexampl
eofdecr
easi
ngdownwar
dmoment
um
aspr
icenear
sasuppor
tlev
els.

Whatyouwi
llseeisthatt
hepri
orcandl
est
ickswi
llt
endt ongerandaspr
obel icenear
s
t
hesuppor
tlevel
,thecandl
est
icksst
art
stogetshor
ter
:
Thisnextchartbel
owshows3bul l
i
shcandl
esinanuptrendeachwi thdecr
easing
l
engths.Inanuptrend,whenyouseesuchhappeni
ngar oundresi
stancelev
els,you
shoul
dt akenoti
ce.Alsowatchforbear
ishr
ever
salcandlest
ickpat
ternstoform.This
wil
lgiveyoutheconfidencetosel
l:
Her
eisanexampleofabul
l
ishmoment
um decr
easi
ngi
nanupt
rendandt
henpr
ice
t
umblesr
ightaf
tert
hat:
Not
ice(onthechar
tabove)howthebul
l
ishcandl
est
ickshadincr
easi
nglengt
hsand
t
hengraduall
ydecr
easedasthepri
cewentupthenf
ollowedbyabigdownward
f
all
/move?

That’
spri
cemomentum.Ev
eryt
imey
oul
ookaty
ourchar
ts,
youneedt
obeawar
eof
such.Ver
yimpor
tant
!

Candl
est
ickWi
cks-
WhyTheyAr
eImpor
tant
Thewicksofcandl
est
icksalongwi
ththebodytel
lastor
y.Awi
ckwhichcanbecal
l
eda
shadowortai
lofacandlest
icki
sali
nesit
uatedaboveandbel
owthebodyoft
he
candl
esti
ck.

Howar
ecandl
ewi
cks(
tai
l
s/shadows)f
ormedandwhatdot
heymean?

 Wel l
,theyar
ef ormedbecauseofachangeinmarketsent
iment
.
 Foranupperwi ck,
priceismovi
ngupandthenmarketper
cepti
onischangedby
trader
sandt henpr i
ceispusheddowntowardst
heopenbysell
ers.That
’show
theuppershadowi sformed.
  Forthelowershadow,pri
cei
smovi
ngdownbutthemarketsent
imentchanges
andpriceispusheduptowar
dst
heclosebuyt
hebul
ls.That
’showalowerwick
orshadowi sfor
med.

Longerwi
cksi
ndi
cat
eincr
easechangei
nmar
ketsent
iment
:

Whati
stheSi
gni
fi
canceofCandl
est
ickWi
cks?
 Candlest
ickwickswi
thl
onguppershadowscommonlyoccurwhenanupt
rendi
s
l
osingstrengt
h.
 Longlowershadowsoccurwhenthedowntr
endi
slosi
ngsteam.

Ok,that’
ttheendofchapt
er4ofthepri
ceact
iont
radi
ngcour
se….
nowl
etsheadt
o
chapter5whereyouwilll
ear
nabouttr
ends.

Pr
iceAct
ionTr
adi
ngCour
se 
CHAPTER5:
  TRENDS
Wheny
ouhav
epr
icemov
ingacr
osst
imeduet
osuppl t
yanddemand,hent
hiscr
eat
es
t
rends.Thi
ssect
ionisadi
scussi
onabouttr
ends,
howt
heyf
orm andhowmanyt
ypesof
t
rendsandwhatkindofst
ruct
uretr
endshave.

I
tisimportantfory
out ounderstandthestr
uctur
eoftrendssoyouwi l
lnotdependon
anyindi
catortotel
lyouifthetr
endi supordownbecauseunderst
andi ngwhatatrendis,
thestr
uctureofatrend,whatsignal
stolooktotel
lyouthatanewt r
endmaybest arti
ng
andprevi
ousoneendi ngisonekeyknowl edgeyourequir
easapriceactiontr
ader.

Andy
ouonl
yneedt
ousepr
iceact
iont
otel
lyoui
fat
rendi
sup,
downorsi
deway
s.

AsI’
vementi
onedabov
e,ther
ear
e3typesoftr
ends.I
nsi
mpl
eter
ms,
atr
endi
swhen
pr
icei
sei
thermovi
ngup,downorsi
deways.

 Sowhenpri
ceismovi
ngup,it’
scall
edanuptr
end.
 Whenpri
ceismovi
ngdown, i
t’
scall
eddowntr
end.
 Whenpri
ceismovi
ngsideways,i
t’
scal
ledandsi
deway
s

Noweachoft
hese3trendt
ypeshav
ecert
ainpr
icestr
uctur
eaboutthem t
hatt
ell
syou
whet
hert
hemarketi
sinanuptr
end,
downtr
endorsidewaystr
end.

Thesest
ruct
uresar
eder
ivedf
rom t
heDowTheor
y.ButIwi
l
lexpl
aini
tinher
ebr
ief
ly.

TheDowTheor
yOfTr
endsSummar
ized
Thet
heor
yinsi
mpl
eter
mssay
sthat
:

1.whenpr i
ceisinanupt rend,pr
iceswillbemaki ngincr
easinghigherhi
ghsand
hi
gherlowsunt i
lahigherlowget sint
er cepted,t
henthatsignal
stheendofthe
uptr
endandt hebeginningofadownt r
end.
2.Fordowntrend,pri
ceswi lbemaki
l ngincr easi
nglowerhighsandlowerlowsunt
il
alowerlowisinter
ceptedandt hatsi
gnal sanendoft hedowntrendanda
begi
nningofanupt rend.

St
ruct
ureofAnUpt
rend(
Bul
l
)Mar
ket
Withanupt
rendmarket
,pri
ceswi
l
lbemaki
nghi
gherhi
ghs(
HH)andHi
gherLows(
HL)
,
seechar
tbelowf
orclar
it
y:
St
ruct
ureofADownt
rend(
Bear
)Mar
ket
Pr
iceswil
lbemakingLowerHighs(
LH)andLowerLows(
LL)
.Thechar
tshownbel
owi
s
ar
eallyi
dealcase,
seechar
tbelowf
orcl
ari
ty:
Butyouknowt
hati
nreal
i
ty,
themar
keti
snotl
i
ket
hat
,it
’smor
eli
ket
hischar
tshown
bel
ow:

Thechartabov
eshowsani nit
ialdownt
rendandalongthewayt her
eisaf al
seupt
rend
whichdoesnotlastandpr
icemov esdownandthenev ent
uall
yanotheruptr
endmov es
i
shappeningbecauseanother l
owerhi
ghhasbeeni nt
ersect
ed(whichsi
gnalsendof
downtr
end).

Thi
sishowy
ouusepr
iceact
iont
oident
if
ytr
ends.Youshoul
dknowt
hisst
uff
.

Becausethemarketi
snotperf
ectwhent hesetr
endsarehappeni
ng,youshoulddevel
op
theskil
ltoj
udgewhenatrendissti
l
lint
actorwhenat r
endispotent
ial
lyr
eversi
ng.And
i
t’spret
tymuchpri
ceint
ersect
inghi
ghsorl ows.
 

St
ruct
ureOfASi
deway
s/Rangi
ngMar
ket
Forarangi
ngmarket,i
nanidealscenar
io,
youwi
llseepr
icemov
ingi
nar
angebet
ween
asupportandr
esi
stancel
evelli
keshownbelow:
Butwhaty
ouseei
nther
eal
wor
ldi
snoti
deal
asabov
e,i
t’
smor
eli
ket
hisasshown
bel
ow:
CHAPTER6:
 
  REVERSALS&
CONTI
NUATION
Areversal
isater
m usedtodescri
bewhenatrendrev
ersesdir
ecti
on.
 Forexample,t
he
markethasbeeninanuptrendandwhenpr
icehit
samaj orr
esist
ancel
evel,
itr
eversed
andformedadowntrend.That’
swhatr
ever
salmeans.

Nowwherecanr
ever
sal
shappen?Thef
oll
owi
ngar
ethemaj
orar
easwher
epr
ice
r
ever
sal
sdohappen:

 Supportl
evels
 Resi
stancelevel
s
 Fi
bonaccilevel
s

Here’
sanexampleofpri
cerev
er singform asupportl
evelandwentupandthenlat
er
br
okeitandwentdown.Nowt hatbr okensupportl
evelact
sasresi
stancel
evelwhen
pr
icecameforare-
testoft
helev elandsentthepri
cetumbl i
ngdown:

whataboutcont
Now, inuat
iont
hen?
Well
,insimpleter
ms, continuati
onmeansthatt
hereisamai ntr
end,f
orexamplean
uptr
end,thati
shappeni ng…andy ouwil
lnoti
cethatpr
iceslowsdownandmay be
consol
idatesforali
ttl
ewhi leandmayfall
backdownal it
tl
e…iti
slkeami
i nor
downtrendinamaj oruptrendmov ecal
l
edadownswi nginanamaj orupt
rend.

Sowhent hatendsandpriceresumesi
ntheor
igi
nalupt
renddir
ectiont
hent
hati
scal
l
ed
acont
inuation.Thechar
tbelowmakesthi
sconceptabi
tmor eclearer
:

Sot
hebi
gquest
ioni
s:howt
ospott
rendcont
inui
tyandexecut
etr
adesatt
her
ightt
ime?

Thesecreti
sinidenti
fi
catonofspeci
i fi
cchartpat
ter
nsaswellasver
yspeci
fi
c
candl
esti
ckspatter
nsandy ouwill
discovermoreontheChar
tPatt
ernsandCandl
est
ick
Patt
ernssect
ionofthiscourse.
 

Top3r easonswhyiti
ssoimportantf
oryouknowi
ng
rev
ersalpoint
s/l
evel
saswell
asunder st
andi
ngtr
end
conti
nuit
ypatter
nsandsi
gnals:
1.Youdon’ twantt obebuyingnearoratar esi
stancelev el(whichi sar eversal
point
).
2.Youdon’ twantt obesell
ingatnearoratasuppor tl
evel (
whi chisar ever
sal
point
).
3.Youdon’ twantbebuy ingwhent hetrendisdownandy oudon’ twantt obesel l
ing
whent hetrendisupt hat’
swhyy ouneedt oknowaboutcont inuationchar t
sand
candlesti
ckpatternswhichwillall
owy outotradewitht het r
end.( Therear e
exceptionsthoughwheny oucant r
adeagainstthemai ntrendliket hatli
kein
tr
adingchannel s…seeChapter9oft hispr
iceactiontradingcour sewher eittal
ks
about:HowToTr adeChannel
s)

CHAPTER7:
  UNDERSTANDI
NGMARKET
SWINGS 
MarketPr
icemov nswi
esi ngs.Apr
iceswi
ngi
swhenmar
ket
smov
esl
i
kewhatawav
e
does.

Soinanupt
rend,
pri
cewi
l
l nghi
bemaki gherhi
ghsandhi
gherl
owsl
i
ket
hef
igur
eshown
bel
ow:
Soi
nanupt
rend,
pri
cemov
esi
nswi
ngsl
i
ket
hischar
tshownbel
ow:

Andi
nadownt
rend,
pri
cewi
l
lbemaki
ngl
owerhi
ghsandl
owerl
ows:

Soi
nadownt
rend,
pri
cemov
esi
nswi
ngsl
i
ket
hechar
tshownbel
ow:
3ReasonsWhyIt
’sSoI
mpor
tantForYouToUnder
stand
MarketPr
iceSwi
ngs
I
fyouwanttobereal
l
ygoodpr i
ceacti
ontrader
,youhavetounder
standthi
sconceptof
howpri
cemov esi
nswings.Thi
sisespeci
all
ytr
ueifyourst
yleoft
radingi
strendt
radi
ng
orswi
ngtr
ading.

Becausei
fyoudon’
tunder
standhowpr
icemov
esi
nswi t
ngs,hi
siswhaty
ouar
egoi
ng
toendupdoing:

1.Youwi l
lexecutet r
adesatt heverywr ongspot!Forexampl e,i
nadownt rend,y
ou
willsel
lwhent hemar ketisjustdoi
nganupswi ng!Notgood!
2.Whi chmeans, youwi l
lgetstoppedoutory ouneedt oputinalargestoploss.
Largestoplossdoesnotnecessar i
lymeanl argeriskifyoudoposi t
ionsizi
ng
basedont hest oplossdistance.Butifyoudon’tthenthat ’
salargeri
sky ouar
e
taki
ng.
3.Ifyouhaveal argestoploss, t
heny ou’vegott
owai tawhi lebeforet
hemar ket
makesdownswi ngbeforeyout ost
ar tseei
ngpr of
itsony ourt
rade.

Her
e’sanexampl
eofwhatI
’
mtal
ki
ngabout
:
It
’sreal
lynotagoodsituat
iont
obei n.
 Everyt
rader
swishi
sthat“t
hemomentat
radei
s
placed,i
tgoestoprof
itimmediat
ely
.”Butweknowt hemar
ketisnotl
i
ket
hat,
somet i
mesthathappens,andsometimesitdoesn’
t.

That
’st
henat
ureoft
hemar
ket
.

Soinanuptr
end,y
oushoul
dbelooki
ngt
obuyont
hedownswi
ng.I
nadownt
rend,
you
shoul
dbelooki
ngtosel
lonanupswi
ng.

Andthebestwayf
ordoi
ngt
hati
sbyusi
ngPr
iceAct
ion(
rev
ersal
candl
est
icks)as
shownbelow:
 

Now,
 thesechar
tbel
owi
swhatact
ual
l
yhappensi
nreal
li
fet
radi
ngenv
ironment
:
CHAPTER8: 
  HOW TOTRADESUPPORT
ANDRESISTANCELEVELS
Nothi
ngismorenoti
ceabl
eonanychartt
hansupportandresist
ancel
evel
s.These
l
evelsst
andoutandaresoeasyf
orevery
onetosee!Why ? Becauset
heyareso
obvi
ous.
Asamat
teroff
act
,suppor
tandr
esi
stancet
radi
ngi
sthecor
eofpr
iceact
iont
radi
ng.

Thekeyt osuccessf
ulpr
iceacti
ont
radi
ngl
i
esi
nfi
ndi
ngef
fect
ivesuppor
tand
resi
stancelev
elsonyourchart
s.

Now,
inher
e,I 
tal
kabout3t
ypesofsuppor
tandr
esi
stancel
evel
sandt
heyar
e:

1.Thenor malhori
zontalsupportandresistancel
evel
sthatyouareprobablymost
famil
iarabout.
2.Brokensupportlevelsbecomer esi
stancelevel
sandbrokenresi
stancelevel
s
becomesuppor tlevels.
3.Dynami cSupportandResistanceLev el
s

Now,
let
’sl
ookateachi
nmuchmor
edet
ail
.

Hor
izont
alSuppor
tandResi
stanceLev
els
Thesear
efai
rl
yeasyt
ospotony
ourchar
ts.
 Theyl
ookl
i
kepeaksandt
roughs.

Thechar
tbel
owi
sanexampl
eandshowsy
out
otr
adet
hem:
 

HowToFindHor
izont
alSuppor
tAndResi
stanceLev
elsOn
YourChar
t
 I
fpri
cehasbeengoingdownforsometimeandhi
tsapr
icel
evel
andbouncesup
f
rom t
here,
that
’scal
ledasuppor
tlev
el.

 Pri
cegoesup,hi
tsapri
celevelorzonewher eitcannotcont
inueupwar
dany
fur
therandt
henrev
erses,
that’
sar esi
stancelevel
.

Sowhenpr i
ceheadsbackt othatsupportorresi
stancelevel
,youshoul
dexpectt
hati
t
wil
lgetr
eject
edfrom t
hatlevelagain.
 Theuseofr eversal
candlest
ickt
radi
ngon
suppor
tandresi
stancelev
elsbecomesv eryhandyinthesecases.
 

Si
gni
fi
cantSuppor
t&Resi
stanceLev
els
Notallsupportandresi
stancel
evelsarecr
eatedequal
.Ify
oureal
lywantt
otaketrades
thathavehighpotenti
alf
orsuccess,youshoul
dfocusonident
if
yingsi
gni
fi
cantsuppor
t
andresist
ancelevelsonyourchart
s.

Signi
fi
cantsupportandr
esi
stancel
evel
sarethoselev
elst
hatar
efor
medi
nthel
arge
ti
meframeslikethemonthl
y,weekl
yanddai
lychart
s.

Andwhenpr
icer
eact
stot
hesel
evel
s,t
heyusual
l
ytendt
omov
eforav
eryl
ongt
ime.

Here’
sanexampleofNZDUSDt hathi
taresi
stancelevelont
hemont hl
yti
mefr
ameand
madea1,100pipsmovedownt othenextsi
gnif
icantsuppor
tlev
elandpri
cecannowbe
seenbounci
ngupfrom t
hatsupportl
evel
:

Now,
her
e’st
het
echni
queIuset
otr
adeset
upst
hathappeni
nlar
gert
imef
rames:
Iswi
tchtosmall
erti
meframesli
ket he4hr&t he1hr,
30min,15minandeventhe5min
andwaitf
orarever
salcandl
est
icksi gnalformyt r
adeentr
ies.Thisi
ssothatIcangeti
n
atamuchbett
erpri
celevelaswellasr educingmyst opl
ossdistance.

That
’swhat
’smul
ti
-t
imef
ramet
radi
ngi
sal
labout
.

Suppor
ttur
nedResi
stanceLev
el AndResi
stanceTur
ned
Suppor
tLevel
Now,t
henextoni
st hi
sthi edSuppor
ngcal
l ttur
nedResi
stanceLev
elAndResi
stance
Tur
nedSuppor
tLevel.
 

Ther
earemanyt rader
sthatdon’tr
eal
izethatusuall
y,i
nadowntr
end,whenasuppor
t
l
evelhasbeenbrokentothedownside,i
toftentendstoactasar
esist
ancel
evel
.Her
eis
anexampleshownont hechartbel
ow:
Sowhenyouseesuchhappening,youshoul
dbelooki
ngforbear
ishr
eversal
candl
est
ick
togoshor
t.Asamatt
eroffactthese“R’
s”aret
heupswingsinadowntr
end.

Si
mil
arl
y,i
nanuptr
endy ouwil
lalsoseesuchhappeningwher
eResist
ancelev
elsget
br
okenandwhenpriceheadsbackdownt ot
hese,theynowwil
lactassuppor
t
l
evel
s…Here’
sanexample:
Lookforbul
li
shrever
salcandl
est
ickar
oundt
heset
ypeofr
esi
stancet
urnedsuppor
t
l
evel
sasy oursi
gnaltobuy.

Canyouseehowtheneedforusi
ngotherindi
cator
sisdi
mini
shedoncey
ouunder
stand
howeasyist
ospotsuchtr
adingset
upslikethese?

CHAPTER9: 
  
HOW TOTRADEPRI
CE
CHANNELS
Whati
sachannel
?AndHowDoYouTr
adeAChannel
?Thi
ssect
ioni
saboutt
hat
.

Thepat
hpr
icef
oll
owsandt
hear
eaencl
osedwi
thi
niti
scal
l
edt
hepr
icechannel
.
Thefundamentalpri
nci
pleofhowachannelf
ormisbasedonsupportand
resi
stance.
 Whypri
cedoesthat,
Idon’
tknow…butconsi
deri
tassupplyanddemandat
work.

Ther
ear
e3maj
ort
ypesofchannel
s:

1.t
heupt
rendchannel,
2.t
hedowntr
endchannel and
3.t
hesi
deways/hor
izontal

Thi
siswhatadownt
rendchannel
looksl
i
keandhowt
otr
adei
t:

Thi
siswhatanupt
rendchannel
looksl
i
keandshowshowy
oucant
radei
t:
Thi
siswhatasi
deway
schannel
looksl
i
keandhowy
oucant
radei
t:

 
Sidewayschannels(orhori
zont
alchannel
s)arel
i
ttl
ebi
tdif
ferentfr
om upt
rendand
downtrendchannelsbecausewithuptr
endanddowntr
endchannels,y
ouwoul dr
equi
re
2pointstodrawtrendli
nesandwaitforpr
icetot
ouchthem l
ateronbefor
ey out
akea
tr
adebecauset hetrendli
nesar
eatanangl e.

Butwithsideways/
hori
zontalchannel
s,youcanactuall
ystar
ttradingt
hesetupatpoint
#2whi chcanbebot haresi
stanceorsupportl
evelbasedonthef actt
hatapri
or
resi
stanceorsupportl
eveli
salreadyvi
si eandy
bl oushouldexpectpri
cetobouncefrom
thoselevel
s.Lookforr
eversalcandl
est
ickstobuyorsellwheny ouseesuchsetups
happening.

Gener
alRul
esForTr
adi
ngChannel
s
1.Ifyoubuyorsell
ont heothersi
deoft hechannel
,youwai tf
orpri
cet oreachthe
otherendofthechanneltotakeprofi
torexitt
hetrade.
2.Placeyourst
oplossonj ustout
sidethechannelorjustabovethehighoft he
candlest
ick(
forasellor
der)orjustbelowthelowofthecandlesti
ck(forabuy
 order
)thattouchedthechannel andshowssignsofrej
ecti
on.Thi
scandlest
ick
canalsobear ever
salcandlest
ick.
3.Youmayal sodecidetotakehalftheprofi
tsoffaspr
iceisi
nthemi ddl
eofthe
channelforaprofi
tabl
etrade.

CHAPTER10:  NI
NE(
9)PROFI
TABLE
CHARTPATTERNSEVERYTRADERNEEDS
TOKNOW
There’
sadif
ferencebetweenchar
tpatter
nsandcandl
esti
ckpatt
erns.
Chartpat
ter
nsar
e
notcandl
est
ickpatter
nsandcandlest
ickpat
ter
nsarenotchar
tpatter
ns:

 Char tpatternsar egeomet ri

cshapesf oundinthepri
cedat athatcanhel
pa
traderunder standt hepriceacti
on,aswel lmakepredicti
onsaboutwherethe
priceisli
kel ytogo.
 Ca ndlest
ickpat ternsont heotherhandcani nvol
veonl yonesingl
ecandl
esti
ckor
agr oupofcandl estickwhichhav eformedone-aft
er-
theot heri
nregar
dtohow
theyf ormi nrelati
ont ooneanot herinter
msoft hei
rbodyl ength,
openi
ngand
closingprices, wicks(orshadows)et c.

Notknowingwhatchartpat
ter
nsarefor
mingcanbeacost
lymi
stake.I
fyouar
eli
ket
hat
,
t
hisisyouroppor
tuni
tytogetbackontr
ack.

Whycostl
ymistake?Becausey
ouar ecomplet
elyunawar
eofwhati
sfor
mingonthe
char
tsandyouendupt aki
ngatradethati
snotinli
newit
hwhatt
hechar
tpatt
erni
s
si
gnall
i
ngortel
l
ingy ou!

Thesear
ethe9 
char
tpat
ter
nsy
ouwi
l
llear
naboutt
oday
:

1.Tr
ianglechartpatt
erns-sy
mmet ri
cal
,ascendi
nganddescending(3pat
ter
ns)
2.Headandshoul dersandInverseHeadandShoulder
s(2patterns)
3.DoubleBottom andDoubl eTop(2patt
erns)
4.Tr
ippl
eBot t
om andTr ippl
eTop( 2patt
erns)

Butf
ir
stup,
Iam goi
ngt
otal
kaboutt
ri
angl
echar
tpat
ter
ns.

1.
Symmet
ri
cal
Tri
angl
e
Thereare3typesoft
ri
anglechar
tpat
ter
nsandt
hechar
tbel
owshowst
hedi
ff
erences
betweeneachv er
ycl
ear
ly:
Now,
let
sst
art
swi
t hesy
ht mmet
ri
calt
ri
angl
epat
ter
nfi
rst
.

I
sASy
mmet
ri
cal
Tri
angl
eBul
l
ishOrBear
ishChar
tPat
ter
n?

 
TheSymmetri
caltr
ianglechar
tpat
ter
nisacont
inuat
ionpat
ter
nther
efor
eitcan 
bebot
h
abul
l
ishorbear
ishpattern:

Whatdoest
hismeant
hen? 
Wel
l
,ify
ouseet
hispat
ter
ninanupt
rend,
expectabr
eakout
t
otheupsi
de.Seeanexampl
ebel
ow:

I
fyouseeasymmetri
calt
ri
angl
epatter
nfor
minadowntr
end,
thenexpectabr
eakoutof
t
hispat
ter
ntothedownsi
deli
kethi
soneshownbel
ow:
 

HowToDr
awASy
mmet
ri
cal
Tri
angl
e

 Youwi l
lseepri
cemov i
ngupanddownbutt hisupanddownmov ementi
s
convergi
ngtoasinglepoi
nt.
 Youneedami nimum of2peaksand2troughst odr
awt hetwotr
endli
neson
bothsides.
 Itwi
llbeonlyamatteroft
imebefor
epr
icebr eaksoutofthepat
ternandei
ther
mov esupordown.
TwoSi
mpl
eWay
sToTr
adeTheSy
mmet
ri
cal
Tri
angl
e

#1:
 Tr
adet
heI
nit
ialBr
eakout

Thebestwayi stoconf i
rmthatthebreakoutactuallyhappenswi t
hacandl esti
ckbef or
e
placi
ngyourorder.WhatIdoIi sforexample,sayI ’
m watchingasy mmet ri
caltr
iangle
forminthe4hrchar tsandIknowt hatsoonabr eakoutwillhappen.Ithenswitchtot he
1hrcharttowaitforthebreakouttohappen.I
fa1hrcandl esti
ckhasbr okenthet r
iangl
e
andclosedbelow/ aboveit
,that
’smyt r
adeentrysignal.SoIwi l
lplaceapendingbuy
stop/sel
lstopordertocatchthebreakoutfr
om t here.
OftenIwanttomakesurethat 
the1hrcandl
est
ickcl
osesout
sideofthetri
angl
ebefor
e
Ienterapendi
ngbuystoporsellst
opordert
ocaptur
ethemovet hathappenst
oavoid
fal
sebreakout
swhil
ethecandlesti
ckhasnotcl
osedyet.

Buther
e’st
hepr
obl
em wi
tht
radi
ngt
ri
angl
ebr
eakout
s,seechar
tbel
ow:

Idon’
tli
ket
radi
ngbr
eakout
sli
ket
heoneshownabov
eandher
e’swhy
:

 Thest opl ossdi stancei stool arge.I’

dpr efertoentert radeswi t
hbreakout
candlestickst hatar ecloset ot hetrendlinest hathav ebeenbr oken.
 Ioftenseet hatsuchbr eakoutofext r
emel yl ongcandl esti
cksarenotsustainabl
e
andpr icewi ll
oftent endtor everseaf t
ersuchcandl esticksascanbeseenbyt he
chartabov e…not i
cet hataftert hebreakoutcandl estick, t
herewasonebear i
sh
greenpi nbarandt henf orthenext4candl esti
cksaf terward,hepr
t i
cewentdown.
Thisiswhatt endst ohappenedwi t
hsuchl ongbr eakoutcandl esti
cks.Soifyou
enteredabuyor derusi ngt hatlongbr eakoutcandl est i
ckabove, youwouldhave
towai tawhi l
efory ourtradetot urnpr of
itable.

#2:Tr
adet
her
etestoft
het
rendl
i
net
hati
sbr
oken

 Thesecondwayt oent
eristowaitf
oraretestofthebrokentrendl
ineinthe
tr
iangl
epatter
nthenei
therbuyorsel
l.
 Thismayalsobehandyifyouhadanextremelylongbreakoutcandlest
ickonthe
i
niti
albr
eakout,y
oubestopti
onistowaitforaretestoft
hebreakoutt r
endl
ine
 t
heni
fthathappensy
ouent
er.

St
opl
ossPl
acementOpt
ionsOnSy
mmet
ri
cal
Tri
angl
ePat
ter
n

Hereare3way sonhowt oplacest

oplossont r
iangl
epatt
erns,whi
chincl
ude
symmet ri
cal,ascendi
nganddescendi
ngtri
anglepatt
ernswhichyouwilll
ear
nnext.The
st
opl ossplacementtechni
queshereareappl
icablet
oallt
riangl
epatt
ernssotakenote
ofthat:

2.
Ascendi
ngTr
iangl
eChar
tPat
ter
n
Andascendi
ngt
ri
angl
epat
ter
nlooksl
i
ket
hischar
tshownbel
ow:

Andt
hisi
showar
eal
char
tlooksl
i
ke:
I
sAscendi
ngTr
iangl
ePat
ter
nBul
l
ishOrBear
ish?

I
tisconsi
der
edabull
ishconti
nuati
onpatt
erni
nanexist
ingupt
rend.Sowheny
ousee
t
hisfor
minginanupt
rend,expectabr
eakoutt
otheupsi
de.

However,
itcanal
sobeast
rongr
ever
sal
signal
(bul
l
ish)wheny
ouseei
tfor
mina
downt
rend.

St
opLossPl
acementOpt
ions

Youcanuset
hest
rat
egi
esgi
veni
nsy
mmet
ri
cal
tri
angl
e.

TakePr
ofi
tOpt
ions
Ipr
efert
otar
getpr
evi
ousr
esi
stancel
evel
sasmyt
akepr
ofi
ttar
get
.

Orasshownont hechar
tbelow,
youcanusethe“x”pi
psdistanceasyourt
akeprof
it
target.Anotherwaytodoitwoul
dbesay3t i
mesthe“x”pipsor2timesthe“xpi
ps”
distance.Thatshoul
dgiveyouyourpr
ofi
ttar
getl
evel(
s).

3.
Descendi
ngTr
iangl
eChar
tPat
ter
n
 

I
mpor t
antthi
ngstonoteaboutthedescendi
ngtr
iangl
echartpatter
n: 
Thedescending
tr
iangl
echartpat
ter
nischaract
eri
zedbyadescendingresi
stancelevel
sandaf ai
rl
y
hori
zontal
supportl
evel
sconvergi
ngtoapointunti
labreakouthappenstothe
downsideasshownbelow:
Andt
hisi
showadescendi
ngt
ri
angl
elooksl
i
keonachar
tshownbel
ow:

 
I
sDescendi
ngTr
iangl
ePat
ter
nBul
l
ishOrBear
ish?

I
tisabear
ishchar
tpat
ter
nthatf
ormsi
nadownt
rendasacont
inuat
ionpat
ter
n.

However
,thi
spat
ter
ncanal
sof
orm asabear
ishr
ever
sal
pat
ter
natt
heendofan
upt
rend.

Ther
efor
eregar
dlessofwher
eitf
orms,
it’
sabear
ishchar
tpat
ter
n.

Howt
oTr
adeTheDescendi
ngTr
iangl
eFor
mat
ion

Simi
l
art
ot heother2tri
anglepatt
erns,
youcaneit
hertradetheini
ti
albr
eakoutorwai
tto
seei
fpr
icereversesbacktotestt
hebrokensupportl
evelandthensell
.

Not
e:wi
that
ri
angul
arpat
ter
n,Iof
tenpr
efert
owai
tforacandl
est
ickt
obr
eakoutand
cl
oseout
sideoft
hepat
ter
nbef
oreIent
erat
rade.Thi
shel
pst
oreducef
alsebr
eakout
si
gnal
s.

Buttherewil
lbeti
meswhenIwi l
ljusttr
adethebreakoutwithapendingsellst
oporder
j
ustaf ewpipsunderthesupportlevelt
ocatchthebreakoutwhenithappensbutwhenI
dothat,Isi
tandwatcht hecl
oseoft he1hrcandl
esti
cktomakesur et hati
tdoesnot
cl
oseabov ethesupportli
ne(i
fthathappens,i
tmaymeanaf al
sebreakout)
.

Andt
hent
her
e’st
hei
ssuesofext
remel
ylongbr
eakoutcandl
est
icksagai
nli
ket
his:

Asment
ionedpr
evi
ousl
y:

 wheny ouhavesuchextremelylongbr
eakoutcandl
esti
cksliket
hat,bett
ertosit
andwai tt
oseeifpri
cewi l
lrever
seandgetbackuptot hesupportl
evelthatwas
broken(ar et
est
)whichwillnowbeacti
ngasar esi
stancelevelandthensell
whent hatl
eveli
stouched.

HowToTakePr
ofi
t

Ipref
ertousepr
evi
oussuppor
tlev
els,
lowsort
roughsanduset
hoseasmyt
akepr
ofi
t
tar
getlev
el.

Anothermet
hodoftakeprofi
tthati
scommonl yusedistomeasuretheheightoft
he
tr
iangl
eandift
heheighti
ssay100pi pst
henthatisyourtakepr
ofi
ttar
get.Thechart
belowshoul
dgivey
ouacl eari
deaofhowi t
’sdone:
Not
ethatont
hechar
t,t
hedescendi
ngt
ri
angl
efor
medt
heendofanupt
rend.

4.
Head&Shoul
der
sChar
tPat
ter
n
 
Theheadandshoulderchartpat
ter
nisabear
ishchar
tpat
ter
n.Thi
siswhataheadand
shoul
derr
ever
salpatt
ernlooksli
ke:
I
mpor
tantt
hingst
onot
eaboutt
heheadandshoul
derpat
ter
n:

 Theheadandshoul
derspat
ter
nisabeari
shrev
ersal
pat
ter
nandwhenf
oundi
n
anuptr
end,i
tsi
gnal
stheendoftheupt
rend.

Her
e’showt
hispat
ter
nfor
ms:

 Event ually,t
hemar ketbegi nstoslowdownaf tergoingupf orsomet i
meandt he
forcesofsuppl yanddemandar egeneral
lyconsi deredinbalance.
 Sellerscomei natt hehighs( l
eftshoul
der)andt hedownsi dei sprobed
(begi nningneckl i
ne. )
 Buy er ssoonr eturnt othemar ketandulti
mat elypusht hrought onewhi ghs
(head. )
 Howev er,
thenewhi ghsarequicklytur
nedbackandt hedownsi deistested
agai n (conti
nuingneckl ine.)
 Tent ativebuy i
ngr e-emer gesandt hemarketr all
i
esoncemor e,butfai
lstotake
outt hepr evioushi gh.(Thislasttopisconsideredt herightshoulder.
)Buy i
ng
dri
esupandt hemar ketteststhedownsidey etagai n.Yourtrendli
neforthis
patter nshoul dbedr awnf r
om thebeginningneckl i
net othecont i
nuingneckli
ne.

Her
e’sanot
herexampl
e:
Her
e’sanot
herone:

HowToTr
adeTheHead&Shoul
derChar
tPat
ter
n. 

Thef
oll
owi
ngchar
tbel
owmakesi
tmuchcl
ear
er.
HowToCal
cul
atePr
ofi
tTar
get
s

 Iuseprev
iousl owsort roughstosetmyt akeprofittarget.
 However,youcanal souset hedistanceinpi psbetweent henecklineandthe
headasyourt akeprofittar
getl
ev el.Soifthedistancei s100pips,thenifyou
tr
adetheinit
ialbreakout,yousetitat100pi pstakepr ofi
ttargetl
evelli
kethe
char
tshownbel owwi t
ht hetwobluel i
nes:

 
 5.
Inv
erseHeadandShoul
derPat
ter
n
Youwillalsoseethi
spatt
ern,t
houghnotaspopular
,it’
sgoodtokeepaneyeoutf
ori
t.
Theinverseheadandshoulderpat
ter
nisbull
i
shreversalcandl
est
ickpat
ter
nandj
ust
theoppositeofheadandshoulder
spatt
ern.

Her
e’swhati
tlookl
i
keont
hechar
tshownbel
ow:
Andt
hisi
swhati
tlooksl
i
keonar
eal
char
t:
 

Howt
oTr
adet
heI
nver
seHeadandShoul
derPat
ter
n

Youcanbuyt heini
ti
albreakoutoftheneckl
i
neorwai tfort
here-
test
,thati
swaitfor
pri
cetobreakoutandthencomebackdownt ot estt
hebrokenneckl
ineandthenbuy.
Usebull
ishrever
salcandlest
icksfort
radeentr
yconfirmati
onify
ouar ewai
ti
ngtobuy
onre-
test.
Ioft
entendtoplacemyprofi
ttargetonprevi
oushighs.Onemethodofcal
cul
ati
ngpr
ofi
t
tar
geti
stomeasur efr
om theheadupt othetrendl
i
neandwhatthedist
ancei
npipsi
s
yourpr
ofitt
arget
.Seethet
wobl uev er
ti
call
inesinthechar
tabove.

6.
Doubl
eBot
tom Char
tPat
ter
n
Adoublebot
tom chartpatterni
sbull
i
shrever
salchar
tpat
ter
nandwheni
tfor
msi
nan
exi
sti
ngdowntr
end,itsignalsapossi
bleupwardtr
end.

Her
e’swhatI
tlookl
i
ke:
Thi
siswhatadoubl
ebot
tom pat
ter
nlooksl
i
keonar
eal
for
exchar
t:
3 Way
sonHowToTr
adeDoubl
eBot
toms

#1:Tr
adet
hebr
eakoutoft
heneckl
i
ne:

Manyt
radersoncetheyseethatthedoubl
epat
ter
nhasf ormedandtheneckl
i
nei
s
bei
ngt
ested,t
hat’
swhent heygetinassoonasabreakouthappens.

#2:Wai
ttoent
eronr
etestofBr
okenNeckl
i
ne

Thenthereareothergroupsoft
rader
sthatl
iket
oenterwhenpri
cerever
sesbackdown
totouchtheneckli
ne,whichnowwouldactasasupportl
evel
.Onceithi
tst
hatneckl
i
ne
l
eveltheybuy.

#3:Buyonbottom 2.I
nt hisway,y
ouhav et
hepotenti
alt
oridethetr
adeall
thewayupi f
theneckl
inei
sinter
cepted.Youshouldconsi
derbuyi
ngonbot t
om 2asbuyingona
supportl
evel
…asamat teroffact
,thati
twhatisi
s!Lookforbul
lishr
ever
salcandl
est
ick
patt
ernsfort
radeentr
ysi gnal
s.

TakePr
ofi
tTar
getl
evel
s

 I
fy oubuyonbot tom 2,youcanuset heneckli
neasy ourt
akeprofi
tlev
el,orany
previ
oushighsabov ethataswell.
 I
fy oubuythebreakoutoft heneckli
ne,usethedi
stancebetweenthebottom and
theneckl
ineinpipstocal cul
ateyourprofi
ttar
get
.Seechartbelowforexample:
 7.
Doubl
eTopChar
tPat
ter
n
Adoubletopchartpatt
erni
sabear ishrev
ersalchartpatt
ernandwhenf oundinan
uptr
endandoncet heneckl
ineisbroken,t
hatconfir
msadownt r  Thedoubl
end. et
ops
arever
ypower f
ulpatt
ernsandifyougetintoatradeattherightti
me,youstandto
makeal otofpr
ofit
swhent hebreakouthappenstot hedownside.

Her
e’sanexampl
eofadoubl
etopChar
tPat
ter
nshownbel
ow:
Howt
oTr
adet
heDoubl
eTopChar
tPat
ter
n 

Ther
e’s3way
stot
radet
hedoubl
etopchar
tpat
ter
n:

#1:
Tradet
hei
nit
ial
breakoutoft
heneckl
i
ne.

#2:Thet
echniqueIli
kemosttotakeasell
tradeonPeak2whenIseeabear i
shr
ever
sal
candl
est
ick.Andifpr
icemovesdownandintersectstheneckl
i
neandcont
inuest
odo
downfur
ther,yourpr
ofi
tsar
edramati
cal
lyincreased.
#3:Youcanwai tforpr
icetogobackupt
otestt
hebrokenneckl
i
ne( whichwouldnow
actasresi
stancelevel
)andwhenyouseeabear
ishr
eversal
candlest
ick pat
ter
n,go
short(
sell
)asthisexamplebel
owshows:
Thi
sishowi
twoul
dlookl
i
kei
nar
eal
for
exchar
t:
Howt
oTakePr
ofi
tOnTheDoubl
eTopChar
tPat
ter
n

Usepr evi
ouslow(suppor
tlevel
s)t
osettakeprof
itt
arget
s.Oranot heropt
ionwouldbe
tomeasur ethedi
stancebetweent
heneckli
neandthehighestpeak( t
herange)anduse
thatdi
f f
erencei
npipsastakeprof
itt
argeti
fyouaretr
adingthebreakoutfrom t
he
neckli
ne.

8.
Tri
pleBot
tom
Idonotseetr
ipl
ebottomsformi
ngqui
teasof
ten…Regar
dlessoft
hat
,youshoul
dhav
e
anideaofwhati
tlooksli
ke:
 

Tri
plebott
omsar ebulli
shrev
ersalchar
tpatt
erns,
whichmeansiffoundinadowntrend
andthispatt
ernstart
stoform andoncetheneckl
inei
sbrokenandpriceheadup,
this
confi
rmsthatthetrendisup.

Her
e’sanot
herexampl
eofat
ri
plebot
tom shownbel
ow:
Howt
oTr
adeTheTr
ipl
eBot
toms

 Manyt raderswaituntilt
heneckl i
neisbr
okenandtradethei ni
ti
albreakout.
 Otherswi l
lwaitforaretestofthebrokenneckl
i
net oenterabuyor deroncet hey
seeabul li
shreversalcandlest
ick…
 Iprefertotaketradesont he3rdbottom bywatchi
ngthepr i
ceaction.IfIseea
bull
ishreversalcandl
estickpatter
n,Ibuy.WhydoIdot hat?Well,
ifpricegoesup
andbr eakstheneckli
neandgoesupwar d,Iwouldbeinal otmorepr ofi
tthanifI
boughtt hebreakoutoftheneckl i
ne.

Pr
ofi
ttaki
ngmet
hodswoul
dbesi
mil
art
odoubl
ebot
tom char
tpat
ter
nment
ioned
pr
evi
ously
…

9.
TheTr
ipl
eTopChar
tPat
ter
n
Tri
pletopsaretheopposi
teoft
ri
plebot
tomsandtheyar
ebear
ishchar
tpat
ter
ns.They
rar
elyoccurbutit
sgoodtoknowwhattheyl
ookli
ke.

Tr
ipl
etopswhenf
oundi
nanupt
rend,
itsi
gnal
stheendoft
heupt
rendwhent
heneckl
i
ne
i
sbr
okenandpr
iceheadsdown.

HowToTr
adeTheTr
ipl
eTopChar
tPat
ter
n

 Someconser vati
vetrader swaitfortheneckl i
netobebr okent otr
adethat
breakout .
 Somewi llmostli
kelywai tforretestofnecklineandt hensel l
.
 IprefertotaketradesonPeak3andi fthet r
adebr eakstheneckl i
neandgoesal l
thewaydown, Ihaveal otmorepr ofi
ttomake.Thekeyt ot akingagoodt r
adeon
peak3i sbylooki
ngf orbear i
shr ever
sal candlest
icks.Thesear ey
oursignal
sto
goshor t
.
 Ifyout akeatradeatpeak3, youpr ofi
ttargetcanbet heneckline.
 Orify outakeat r
adeont hebreakoutoft heneckline,measur ethedi
stancein
pipsbet weentheneckl ineandt hehighestoft he3peaksanduset hatdist
ance
tocalculateyourprofittarget
.Ory oucanuseapr eviouslowanduset hatasyour
takepr ofi
ttar
getlevel aswell.

CHAPTER11:
  TEN(
10)PROFI
TABLE
CANDLESTI
CKPATTERNSEVERYTRADER
NEEDSTOKNOW 
Therearel
otsofcandl
est
icks,butoutofal
lofthem onl
y9t
hatyour
eal
lyneedto
know. 
Why?Becausether
ear everypopul
ararereal
l
ypower
fulsowhywasteti
mewi
th
ther
est?

Whenthesecandl
esti
cksfor
m atsuppor
tandr
esi
stancel
evel
sorFi
bonacci
lev
elst
hey
ar
egreattr
adeentr
ysignal
s.

#1:
TheDoj
iCandl
est
ickPat
ter
ns.
 

Thedoji
candlest
icksar
esi
ngle(
indi
vi
dual
)candl
est
ick
pat
ter
ns.Ther
ear
e4t
ypesofdoj
icandl
esti
cksasshownbelow:

1.Thedojicr osscanbebot hconsideredabulli

shorbear i
shsi gnal
dependingon
whereitf orms.
2.Thegrav estonedojiisconsi deredabear i
shreversalcandlesti
ckwhenf or
medi n
anuptrendori nar esistancelev el
.
3.Thedragonf lydoji
isconsi der
edabul li
shcandlesti
ckpat t
ernwhenf ormedina
downtrendori nasuppor tlevel.
4.Thelong- l
eggeddoj ishowsaper i
odofindecisi
onbybul l
sandbear sand
dependingonwher eitf orms( uptr
end/resi
stancelevel
=bear i
shsignal
,
downtrend/ supportl
ev el=bull
ishsignal
)itcanbeconsi deredabear i
shorbull
i
sh
si
gnal.

#2:
TheEngul
fi
ng 
Candl
est
ickPat
ter
ns
 Theengulf
ingpatt
ernsare2candlesti
ckpatt
erns.
 Forabul
li
sh
engul
fi
ngpatt
ern,y
ouwil
lseethatthefi
rstcandl
eisbeari
shfoll
owedbythesecond
candl
ewhichi
sv er
ybul
li
shandthis2ndcandlecompl
etelyengul
fs

1.Bul
li
shEngulfi
ng-whenf ormedi
nasuppor tl
evelori
nadowntr
end,t
hiscan
si
gnalthatt
hedownt rendispot
ent
iall
yending.
2.Bear
ishEngulf
ing-whenf or
medinanuptrendororinar
esi
stancel
evel,
thi
sisa
si
gnalthatt
heuptrendmaybeendi ng.

#3:
Har
ami
Candl
est
ickPat
ter
ns.
 

Thehar
ami
isa2candl
est
ickpat
ter
nandcanbebul
l
ishor
bear
ish.

1.Bull
i
shHar ami-thisisa2candlesti
ckpat t
ern.Thefir
stcandlest
ickisav ery
beari
shcandlestickfoll
owedbyabul li
shcandl e,whi
chisquiteshortandi s
completel
ycov eredbyt heshadowoff i
rstcandle.Wheny ouseet hi
sina
downtrendorinanar eaofsupport
,thi
swi l
l beyourbull
i
sh(buy)signal.
2.Beari
shHar ami i
st heexactopposi
teofbul l
ishharami.Wheny ouseet hispat
ter
n
for
mi nar esi
stancel evel
orinanuptrend,thisisabeari
shreversalsignaland
mayindicatethattheupt r
endisendingandy oushoul
dgoshor t(sell
).
Theeasi
estwaytoremembert
hehar
ami
pat
ter
nsi
stot
hinkaboutapr
egnantwoman
andababyinsi
dehertummy:

#4:
Dar
kCl
oudCov
erCandl
est
ickPat
ter
n

Thedarkcloudisanotherbear
ishreversalcandl
est
ick
patter
nformati
onconsist
ingof2candlesti
cks.Thefir
stoneisabul li
shcandl
esti
ck
showingastrongupwardmoment um butwhent hesecondcandlef orms,i
tshowsa
completel
ydiff
erentst
ory
…itsbear
ishanditclosesataboutthemi ddwaypointofthe
fi
rstcandl
est
ick.

Wheny ouseethedar
kcloudcovercandl
esti
ckpatt
erninanuptr
endori
n l
evelof
 
resi
stance,
it’
sabear
ishrev
ersalsi
gnalandyoushouldbethi
nki
ngtogoshort(
sel
l)
.

 
#5:
Pier
cingLi
neCandl
est
ick Pat
ter
n

Thepiercingl
inei
stheopposit
eofdarkcloudcov er.Youmaysee
thi
sinadownt r
endorformi ngatasupportl
evel
.Thefi
rstcandlest
ickisverybeari
sh
andwhent he2ndcandl
eforms, i
ttel
lsacomplet
elydi
ff
erentstory,
it’
sbulli
sh.Thist
ell
s
youthatthebearsarel
osingsteam andthatt
hebull
saregainingstrengthtopotent
ial
l
y
mov ethemarketpri
ceup.

Thesecondbul
l
ishcandl
est
ickshoul
dcl
osesomewher
eupt
hemi
nd-
poi
ntoft
hef
ir
st
candl
esti
ck.

Sowheny ouseethepi
ercingl
i
nepat t
ernfor
mingatsupportl
evel
sorinadowntr
end
market,t
akenoteasthisisapotent
ialbul
l
ishrev
ersal
signalsoyoushoul
dbethi
nki
ng
ofgoinglong(buy
ing).

#6:
Shoot
ingSt
arCandl
est
ickPat
ter
n

Thi
sisoneofthemostrel
i
abl
ecandl
est
icksandobv
iousl
yoneof
t
hemostpopul
arduet
othefactt
hattheyar
esoeasyt
ospotonanychar
t.

Theshootingstari
ssi
nglecandl
esti
ckpat
ter
nandwhenitfor
msinanupt
rendorina
resi
stancelev
el,t
heni
tisconsi
deredasabeari
shr
ever
salpat
ter
nandsoyoushouldbe
l
ookingtosell.

Not
e:t
heshoot
ingst
ari
ssomet
imescal
l
edt
hebear
ishhammer
,inv
ersehammer
,
i
nver
tedhammerorbeari
shpi
nbar
.Theyal
lmeant
hesameandr
efert
otheshoot
ing
st
arcandl
est
ickpat
ter
n.

#7:
HammerCandl
est
ickPat
ter
n

Thehammercandlesti
ckisasingl
ecandl
est
ickpat
ter
npatt
ernandit
s
i
sconsideredabull
i
shrever
sal
candlest
ickpat
ternandi
t’
stheopposi
teoft
heshooti
ng
st
arcandlest
ickpat
ter
n.

I
thasav
eryl
ongt
ail
andashor
tupperwi
ckornoneatal
l
.

Whenitfor
msi nadowntr
endoratsuppor
tlev
els,
youshoul
dtakenote…thi
sisaver
y
hi
ghprobabil
i
tybul
li
shrev
ersal
candl
esti
ckpatt
ernand y
oushouldbelooki
ngtogo
l
ong(buy).

#8:
Hangi
ngManCandl
est
ickPat
ter
n

 Now,whathappensifyouseeinanuptrendacandlesti
ckthatl
ooks
l
ikeahammer
?Isitst
il
labull
ishsignal
?Well
,i
 nthatcase,
 thi
scandl
esticki
sahanging
manandit
snotabull
i
shsignal.Here’
showitl
ooks:

Now,
thehangi
ngman,
isexact
lyl
i
kehammerbutt
heonl
ydi
ff
erencei
sthati
tmust
f
ormi
nanupt
rend.

Whenitf
ormsinanupt
rendori
nresi
stancel
evel
s,i
ttel
l
syouthatt
hereisapossi
bil
it
y
t
hatt
heuptrendi
sendi
ngsoyoushouldbelooki
ngtogoshor
t(sel
l
).Seechar
tbelow:

#9:
Rai
l
wayTr
ackCandl
est
ickPat
ter
ns

Therail
waytrackpatter
nisa2- candl
est
ickpatt
ern
andther
e’sabeari
shandbull
ishrai
lwaytrackcandl
estickpat
tern.Anotablef
eatureof
rai
l
waytracksist
hatt
heylookli
keparal
ledrail
waytracks…andbot hcandl
esti
cksshoul
d
beofalmostthesamelenghandbodyandal mostlookl i
kemirr
ori mageofeachother
.

1.Forabearishrai
l
wayt r
ack,t
hefir
stcandl
eisbull
i
shf ol
l
owedbyalmostexactl
y
thesamelengthandbodyoft hesecondcandl
est
ickwhichi
sbull
i
sh.Thi
st el
l
s
youthatbull
sarelosi
nggroundandbearshavegainedcont
rol
l
ed.

Sowheny
ouseet
hebear
ishr
ail
wayt
rackpat
ter
ninanupt
rend,
ori
nanar
eaof
r
esi
stance,
thi
sisasi
gnal
thatt
hedownt
rendmaybest
art
ingsoy
oushoul
dbel
ooki
ng
t
osell
.

1.Si
milar
lybutopposit
eisthebull
i
shr ai
lwaytr
ackpatter
n.Wheny ouseet
hisi
na
downtr
edorinanar eaofsupport
,takenotebecausethemarketmaybeheading
upandthisi
sy oursi
gnaltobuy.

#10:
Spi
nni
ngTop 

Spinningtopscanbecontinuati
oncandlest
ick
pat
ternsorrev
ersal
candlesti
ckpat t
erns. 
Spinningtopshavesmallbodieswit
hupper
andlowershadowsthatexceedt helengt
hoft hebody .Spi
nni
ngtopssignali
ndecisi
on.
Aspinni
ngtopisasingl
ecandl esti
ckpatter
nandi tcanbebot hbul
li
shorbearish.

Letmeexpl n.I
ai fy ouseearebeari
shspinni
ngtopinasuppor
tar
eaorinadowntr
end,
thi
scanbeconsideredabull
ishrev
ersalsi
gnalwhent
hehighoft
habeari
shspi
nni
ng
topisbr
okentotheupside.

Si
milar
ly,
abulli
shspinni
ngstopinaresi
stancel
evelori
nanuptr
endcanbeconsi
der
ed
abeari
shsignalassoonasthelowisbrokentot
hedownside.

Exampl
ebel
owshowswhatImean:
Spi
nningtopsar
efair
lyshor
tinl
engthcomparedtoothercandl
est
icksandthei
rbody
l
engthisafewstepswidert
hanthatofdoj
icandl
est
icks(whi
chactual
lyhav
enoneor
ver
ytinybodi
es)
.

Anot
hernot
ablef
eatur
eofspi
nni
ngt
opsi
st hewi
hatt cksonbot
hsi
desshoul
dbe
al
mostthesamelengt
h.

WhenIseespi nni
ngtopsf or
m onsupportorr
esi
stancelev
els,
alli
ttell
smet hebears
andbullsdonotreal
lyknowwher et
opusht hemarketandsowhenabr eakoutoft
he
l
oworhi ghofaspinningtopbythenextcandl
ethatfor
msusual l
ysignalsthemovein
thatdi
rect
ionofbreakout
!

Her
e’sanexampl
e:
 

Bl
endi
ngCandl
est
icks-
AConceptEv
eryTr
aderNeedsTo
Know
Thi
sisatechni
quewherenotmanytr
adersareawareaboutandIwi
l
ljustgi
vey
oua
si
mpleexamplesoyouunderst
andt
hisconceptbet
ter
.

Togiveyouabitofcontext,i
fyouareaforextr
aderandyouareusi
ngthemetrader4
tradi
ngpl
atf
orm,itgotonly9timef
rameswher eyourchar
tscanbeviewedi
nwhi chare
the1m,5min,15m,30mi n,1hr
,4hr
,dai
ly
, weekl
y&mont hl
yti
meframesas shownon
thechar
tbelow:
Youmayseeahammerint
he1hrt
imeframebutremembert
hatt
hat1hrt
imef
ramehas
two-
30mi
nutecandl
est
omake1hr,r
ight?Yes.

Sowhatdoy outhi
nkt hecandlesti
ckpatt
ernwouldbeinthet wo-30minute
candl
est
ickstogiv
ey ouabul li
shhammercandlesti
ckpatterninthe1hrtimef
rame?Or
i
fyouseeashoot i
ngst ar
tbearishcandl
esti
cki
nt he1hrti
mef rame,whatdoyouthink
wouldbethecandlesti
ckpatterninthet
wo-30minutecandlest
icksthatgavet
hat1hr
candl
est
ickashoot i
ngstar?

Wel
l
,youranswer
sar
ebel
ow:
Hopey
our
eal
l
y under
standt
hisconceptbecauseher
e’swhy
:

Inthemetatr
ader
4tradingpl
atf
orm,ther
e’snotpart
nerti
mef r
amefor1minut
e…you
needa2mi nut
echartwhichdoesnotexi
st.Si
mi l
arl
y,t
here’
sno10minchartwhi
chy ou
canusetoblendwit
ht heexi
sti
ng5mi nt
imeframe.Simil
arl
y,t
her
eisno2hrtimefr
ame
togowit
h4hrt i
mefr
ameandno8hrt imefr
amet ogowi t
htheexi
sti
ng4hrti
meframe.

Solet
’ssayyouareatr
aderthatl
ovestotr
adeonlyhammersandshoot
ingst
arsand
youarewait
ingbuyatamajorsuppor
tli
neinthe1hrti
mef
rame.

You’
vebeenwai t
ingpat
ient
lyforabull
i
shhammercandl
esti
ckpatt
erntof
ormtogive
youthesignal
tobuy.Butunfort
unat
ely,
nohammerfor
ms inthe1hrti
mefr
ameand
eventhoughyouseeabulli
shengulf
ingpat
ter
nfor
med,youdidnotent
erabuyt
rade.

Youjustwat
chedaspri
ceshootsupandyouwishedyoucouldhav
eboughtatt
he
bul
li
shengul
fingsi
gnal
thatwasgiv
enbutyouareonl
yint
erestedi
ntr
adi
nghammers.

Well
,ift
herewasa2hrt i
mef rameinmetrader4,y
oucouldhaveswit
chedtoitandseen
averybull
i
shhammerandy oucouldhavetakenthetr
adebutbecauseyoudidnot
underst
andtheconceptofblendi
ngcandlest
icksyoumissedaverygoodtr
ade!!
!
Her
ear
efewmor
eexampl
es:

Not
iceal
sot
hatapi
erci
ngl
i
nepat
ter
nwhenbl
endedf
ormsahammer
.

ADar
kcl
oudcov
erwhenbl
endedal
sof
ormsashoot
ingst
ar.
>

CHAPTER12:
 
 HOW TOTRADEFI
BONACCI
WITHPRI
CEACTION
 
Now, Idon’tknowabouty oubutonet hi
ngIcontinuetoseei
sthatpri
ceact
ionr
espect
s
Fi
bonaccilevels…notallt
hetimebutwheni tdoes,someofthemarketmoves
gener
atedcanmakey oumoneyv eryeasi
ly
.Thet ri
cki
stouseFibonacci
andcombinei
t
wit
hpr i
ceactionbyusi ngrev
ersalcandl
esti
cks.

Butfir
st,
ifyou’
venev
erhear
daboutFi
bonacci
ret
racementt
ool
,thenher
e’sabr
ief
i
ntroduct
ion…

WhatI
sTheFi
bonacci
Ret
racementTool
?
Thist
ooli
saser i
esorsequenceofnumber
sident
if
iedbyaguycall
edLeonar
do
Fi
bonaccii
nthe13thCent
ury.(
He’sl
ongdead…)No,needt
ogointopoi
ntl
essdet
ail
s
abouthowthosenumbersarederi
ved.
Sowhatact
ual
l
yisaFi
bonacci
Ret
racement
?

 
Intechnicalanaly
sisFibonacciret
racementiscreatedbytakingt woextr
emepoi nts
(usual
lyamaj orpeakandt rough)ony ourf
orexchartanddividingthever
t i
caldi
stance
bythekeyFi bonaccir
atiosof23.6%,38.2%,50%,61.8%and100%.Oncet heselevel
sare
i
dentifi
ed,hori
zontall
inesaredrawnandusedt oidenti
fypossiblesupportand
resi
stancelevel
s.

Thetwofi
blevel
sIuset
hemostar
ethe50%andt
he61.
8%.Ir
eal
l
ydonotf
ocusatal
l
ontheot
hers.

I
fyouareusingmetet
rader
4Tr
adi
ngpl
atf
orm,
theFi
bonacci
tool
hasani
conasshown
onthechar
tbelow:

Top3ReasonsWhyYouNeedAFi
bonacci
Ret
racement
Tool
:
1.Inadownt rend,aft
erpr i
cehasbeengoi ngdownf orsomet ime, i
twi l
lmov eback
up( upswi ng…r emember ?
).TheFibonacci retracementt ool
canhel py ouest i
mat e
orpr edictpot enti
alpricerever
salareasorl ev el
s.
2.Simi l
arly,inanupt rend,pri
cewillmakemi nordownt rendmov es(downswi ngs)
andt heFi bonacci retr
acementt oolwillhelpy oupr edictpotenti
al r
eversal
sar eas
orpr icelevels.
3.Ifusedi nconj unctionwi t
hsuppor tandr esistancelev el
sandcombi nedwi thpr i
ce
action,theydor eall
yform apower fulcombi nati
onanddogi v
ehi ghlyprof
itable
tradingsi gnals.Thisdescr i
bessomet ngknownas“
hi pri
ceconf l
uence”.Iwi l
ltal
k
mor eont hatlater.

Howt
oUset
heFi
bonacci
Tool
OnMet
atr
ader
4
I
tisact
ual
l
yav
erysi
mpl
e3st
eppr
ocess:

Step1:f
indapeak(upswi
ngpoi
nt/
resi
stancel
evel
)andat
rough(
downswi
ng
point
/suppor
tlev
el)

St
ep2:
Cli
ckont
heFi
bonacci
tool
iconony
ourchar
t.
Fort
henextst
eps,
it’
sal
lcl
i
ckanddr
agpr
ocess…

Step3a:
Inadowntr
endmar
ket,
y oucl
ickf
ir
stonthepr
eviouspeakwhereyouwantto
analy
sefr
om anddr
agdowntothetr
oughwherepri
cerev
ersedfrom andr
elease.

Step3b:I
nanupt
rendmar
ket
,cl
i
ckanddr
agf
ir
stont
het
roughupt
othepeakand
rel
ease.

That
’showsi
mpl
eiti
stodr
awFi
bonacci
ret
racementl
evel
sony
ourchar
ts.

Onthechar
tbelownot
icet
hatpr
icef
ormedapeakandthenmov
eddown,
found
suppor
tandfor
medatrough,
andpri
cewentbackup:
Atar
oundthe50%fiblevel
,i
tstar
tst
oslowsignofl
osi
ngtheupwar
dsteam.Youcan
al
soseethebear
ishspinni
ngtopcandl
est
ickwhi
chcoul
dhavebeenusedasasignal
to
goshor
t(sel
l
).

Canyoubuyorsellj
ustbasedent
ir
elyonthefi
bnumber
sli
ke50%or61.
8%assoonas
pr
icereachest
heselev
elswit
houtpri
ceacti
on?

Well,It
hinkthatther
earetrader
soutt heret
hatdot hatandyoucandot hat
. But
personal
ly,Idonotli
kethatapproach.I’
drathercombineFibonacciwi
thr ev
ersal
candlest
icks,t
rendli
nes,suppor
t&r esist
ancelevel
setcfortradeentr
ies.

Let’
sst
udythepast
…her e’sanexampl
eofhowtot r
adeFibonacci
withpri
ceact
ioni
n
anuptr
end.Not
icet
hespi nni
ngtopcandl
est
ickr
ightatt
he50%l evel
whichcoul
dhave
beenusedasabuysignal:
Her
e’sanot
herexampl
eofhowt
otr
adeFi
bonacci
wit
hpr
iceact
ioni
nadownt
rend:
Youcanseethatt
hisi
snotcompli
cat
ed,
isn’
tit
? Ver
ysi
mpl
etr
adeset
ups.Yourr
isks
ar
esmallcomparedtothepr
ofi
tsy
oupotent
ial
l
ycanmake.

CHAPTER13:
 
  HOW TOTRADE
TRENDLI
NESWITHPRICEACTI
ON
 
Whent hemarketi
sheadi
ngdown,
itf
ormsdownswi
ngsandupswi
ngsasi
t
cont
inual
lymovesl
ower.

Simi
larl
y,whent
hemarketi
sinanupt
rend,
itwi
l
lfor
m upswi
ngsanddownswi
ngsasi
t
cont
inuestomoveup.

Thepeaksthatar
efor
medbyt
heupswingsandt
het
roughst
hatar
efor
medbyt
he
downswingscanbeusedt
odr
awtrendl
i
nes.

 Andyouneedaminimum of2peakst
odr
awadownwar
dtr
endl
i
nef
oramar
ket
thati
sinadownt
rend
  andyouneed2t
roughst
odr
awanupwar
dtr
endl
i
nef
oramar
kett
hati
sinan
upt
rend.

HowToDr
awDownt
rendTr
endl
i
nes
Now,foramar
ketinadownt
rend,
youcanconnectt
he 
peakswi
thal
i
neandt
hatf
orms
youdownwar
dtrendl
i
ne.

Whatyouarewait
ingf
ori
sforpri
cet
ocomebackupandtoucht
hattr
endl
ineandwhen
i
tdoes,t
hiscoul
dmeanthatadownswi
ngwi
llst
artandi
tmaybethebestti
metoenter
ashortt
rade.

Theuseofbeari
shr
eversalcandl
est
icksast
radeconf
ir
mat
ioni
shi
ghl
yrecommended
wit
hthi
stradi
ngmethod.

 
HowToDr
awUpwar
dTr
endl
i
nes
Whenthet
hemarketi
sinanupt
rend,
connect2tr
oughsandyouhaveanupwar
d
t
rendl
i
ne.Whenpr
icecomestot
ouchitl
ater
,youhaveapot
enti
albuyset
up.

Thechar
tbel
lowsshowsal
iveexampl
eofalongt
radeonAUDNZDpai
rthatIt
ookat
themomentwhil
stIwaswr
it
ingthi
sgui
de.
 

Asy oucansee,Iwasanti
cipati
ngamov euptothe1. 1290lev
elandusedt hatasmy
takeprof
itt
argetl
evel
.Obviousl
y,thi
str
adewast akenbasedont hesetupinthedaily
ti
mef r
amewhi chmeansitmaybeaweekort wobef orethepr
ofi
ttargetishi
tifthe
marketmakesani cemoveuport heopposi
tecanhappen, pri
cebreaksthetrendli
ne
andIgetstoppedoutorIcanwal kawaywit
hsomepr ofi
tswhenmyt rail
i
ngst opgets
hit
.

Butthenextday,
pri
cebrokethatupwardtrendl
ineandIgotstoppedoutwit
haloss.But
her
e’sthethi
ngwithat
radel i
ket …myst
hat oplossisti
ght
,wit
hapot enti
alr
ewardof
morethan3t i
meswhatIriskedfort
histr
ade.Here’st
hechartofwhathappened:
Istr
onglyr
ecommendt hatyouusebul
l
ishr
ever
sal
candl
est
icksasasi
gnal
for
execut
ingyourbuy
/longtr
ades.

I
’
m not
 gl
amor
izi
ng 
pri
ceact
iont
radi
ngher
e.Youwi
l
lhav
elossesl
i
kewhatI
’
veshown.

Butt
hinkaboutt
his…i
fthepr
icehadmov
edt
hewayIanal
ysed,
Iwoul
dhav
emadeal
ot
moreprof
it
sthanwhatIlost
.

Wit
hPri
ceact
iontr
adi
ng,y
ouareri
ski
ngl
esswi
tht
hepot
ent
ial
tomakemor
eandt
hat
’s
t
hebeaut
yofpri
ceact
iont
radi
ng.

Whathappensi
fthet
rendl
i
neget
sint
ersect
ed?
Ther
ear
eacoupl
eoft
hingsy
ouneedt
obeawar
ewhenat
rendl
i
neget
sint
ersect
ed:
(
1)Thef
ir
sti
sthati
tcoul
dmeant
het
rendhasnowchanged.

(2)
Thesecondisthati
tcanbeaf
alsebr
eakonl
yandpr
icewi
l
lsoonheadbacki
nthe
ori
ginal
dir
ect
ion.

Now,there’
sanothert
hingabouttrendl
ines,
ifonetr
endl
ineget’
sbroken,y
ouneedt obe
seei
fy oucandrawanot hertr
endli
neabove(orbel
ow)theonethat’
sbroken.Ther
ecan
be2ormor edownwardt r
endli
nesor2ormor eupwardtr
endl
inesatanyonet i
meon
anychartinanyti
mefr
ame.

Soi
fpr
icebr
eakst
hef
ir
stt
rendl
i
ne,
itst
il
lhasy
ett
oheadt
othe2ndandt
het
hir
det
c…

Soifyout
akeasel
ltr
adeonthefi
rsttr
endli
nebutpr i
cei
nter
sectsitandyouar
e
st
oppedoutwi
thalossandnowpriceisheadi
ngt othe2ndt
rendl
ineabov
e,youshoul
d
al
solookt
osell
ify
ougetbeari
shreversal
candlesti
cksi
gnal.

Here’sanexampleofatr
adeinasimil
arsi
tuati
ont
hatIt
ookont
heAUDUSDpai
r.See
chartbel
ow:(enl
argei
fyoucannotseecl
earl
y).

 
Youwillnot
icet
hatIt
ookthefi
rsttr
adeonthef i
rstdownwar
dtr
endl
inebasedona
bear
ishharamiandal
soaspinningtoppat
terntherebutt
henpr
icei
nter
sect
edthat
tr
endli
neandwentuptothe2nddownwardtrendli
ne.

Isawashoot i
ngstarsoItookanot
hershor
ttr
ade. 
Obviousl
y,y
oucanseehowthe
pri
cereact
edtot het
rendl
i
nebyf or
mingashooti
ngstar
.Thatwasenoughsi
gnalf
orme
toshortt
hispair
.

Youneedt
obeawar
eoft
heseki
ndsoft
rendl
i
nesnotonl
yont
hesel
lsi
debuyt
ont
he
buysi
deaswel
l
.

Isuggesty
oucheckout
 Tr
endl
i
neTr
adi
ngSy
stem f
ormor
einf
ormat
iononhowt
otr
ade
i
t.
CHAPTER14:
 
 HOW TOTRADEMOVI
NG
AVERAGESWITHPRI
CEACTION 
Rememberi
nthebegi
nni
ngIdi
dbr
ief
lyment
ionedsomet
hi Not
ngabout -So-
Pur
ePr
ice
Act
ionTr
adi
ng?

Wel
l
,nowwear
eati
t!

Wheny ouusepriceacti
ontradingwit
honeot herindi
catororacombinati
onof
i
ndicator
swhichareincorporat
edint
oy ourtr
adingsystem thent
hat’
swhatIcallNot
-So
-PurePri
ceActi
onTrading.(Cal
l i
twhatevery
oul i
ke,i
fyout hi
nkI
’m wrong,Ir
eal
l
ydon’t
care).

Manynewtrader
sthatf
inditdi
ff
icultt
odefi
nethestr
uctur
eofatr
endingmarket
,
t
heref
oret
heyrel
yonmov ingaveragesfort
renddet
ecti
onori
dent
if
icati
on.

Theonl
ythi
ngIseeusef
uli
nmov
ingav
eragesi
sfordy
nami
csuppor
tandr
esi
stance

l
ev el
s.Iwi
l
lexpl
ainthi
s conceptshor
tl
y.Asa
mat t
eroff
actmovingaver
agesdoater
ri
blej
obofpredi
cti
ngt r
endsinthattheyonl
ydo
thataft
ert
hattr
endhasalr
eadyst
art
edalr
eadyandpri
cehasmov edagreatdeal
alr
eady.

Her
e’sanexampl
e:
 

I
nthechar
tont helef
t,noti
cethatpricehascr
ossedt
heHL(hi
gherlow)al
ready
,
i
ndi
cati
ngthatthedowntrendmar kethasstar
ted(
pot
ent
ial
l
y).Butnoti
cet
hatthe
movi
ngaverageshavenotcr ossedyet.

Sopriceact
ionist
ell
i
ngyouthaty
ouar
enowpot
ent
ial
l
yinadownt
rendbutmov
ing
aver
ageissaying“
notyet
”.

Soyouhavetwoconfli
cti
ngsi
gnal
s.Andbyt
het
imemov
ingav
erageconf
ir
mswhatt
he
pr
iceact
ionhasi
ndicated,

pr
icehas
al
readymadeagr
eatdeal
ofmov
edownwar
dal
readyasshownbyt
hischar
tont
hel
eft
.

Sowhichareyoureal
lygoi
ngtopi
ck?Dependonmov
ingav
eraget
otel
lyout
hatat
rend
haschangedordependonpri
ceacti
on?

Ir
eal
l
ycan’
tfor
ce,
it’
syourchoi
ce.

UsingMovingAveragesForDy
nami
cSuppor
tAnd
Resist
anceLevel
s
Theconceptofdynami
csuppor
tandr
esi
stancecanbef
ull
yunder
stoodwi
thaf
ew
char
tsgiv
enbelow.

Whent hemarketi
sinadownt r
end,youwill
noti
cet
hatpri
cemovesuptothemov ing
averagel
ines(
upswing)andthenbouncesbackdownfrom t
hem (
downswing)
.(Thatis
i
fy ouputmovingaver
ageli
nesony ourchart
s).

Her
e’sanexampl
e:
Thesi
mil
arsi
tuati
onhappensi
nanuptrend:pr
icesmov edowntot
hemov
ingav
erage
l
ines(
downswing)andt
henbouncesupfrom t
hem (upswing)
.

Her
e’sanexampl
eshownont
hechar
tbel
ow:
Nowt haty
ouknowt hisconceptofdynamicsupportandr esist
anceusingmov ing
aver
ages,thenextt
hingyouneedt oknowisthattr
endt r
adi ngstr
ategi
escanbe
cr
eatedaroundthem andinav er
ynicetr
endingmar ket
,theyar er
eall
yeffect
ive.

Fort
hosethatl
ovemovi
ngaver whaty
ages, oucandoistolookr
eversalcandl
est
icks
aspri
cest
artst
ogobacktotouchthemovi
ngaver
agel
inesandtheseareusedasy our
conf
ir
mati
onsignalt
obuyorsell
.

 Inadowntrend, y
oushouldbelookingforbearishreversalcandlesti
ckslikethe
shoot
ingstar,beari
shhar
ami,spinningtops,darkcloudcov er,
hangi ngmanet c
togoshort(sell
).
 Inanuptr
end, youshoul
dbelookingoutf orbulli
shreversalcandlestickpatt
erns
 l
i
kepi
nbar
s,doj
i
s,pi
erci
ngl
i
ne,
bul
l
ishhar
ami
etc…

Let’
sst
udyt
hepastagai
n…ont
hechar
tbel
owi
sanexampl
eofhowt
otr
adedy
nami
c
suppor
twi
thPr
iceActi
on:

Now,it
’seasytosayherethat“youcoul
dhaveboughther
eandsol
dhere”etcbasedon
whathappenedinthepastbecausenowy oucanseehowthemar
kethasplayedouti
n
t
hepast…

Butreal
chal
lengef
ormanytrader
sisthatwhenasetupishappeni
ng,
theywi
l
lmost
l
ikel
ysecondguessi
tbecausethi
sishowitsgoi
ngtolook:
Andt
hisi
showhowi
ttur
nedout
:
Her
e’sanexampl
eoft
radi
ngusi
ngdy
nami
cresi
stancel
evel
swi
thpr
iceact
ion:

 
CHAPTER15:  HOW TOTRADE
CONFLUENCEWI THPRI
CEACTION
Whati
sconf
luence?Wel
l
,let
’sf
indouther
eint
hisf
oll
owi
ngexampl
e…

Whati fyouwerewat chingt hemarketandtheny ousawthatpr

iceisheadi
ngtoa
resist
ancelevel
andt heny oucheckedyourFibonaccir
etr
acementandit’
salmostli
kea
coinci
dencethatther esistancel
evelsi
salsoat61. 8Fi
bonacci
levelaswell
.Andthere’
s
evenmor e…theoveralltrendisalsodown.

Soy
ouhav
e3t
hingsl
i
ningupf
ory
ou,
her
etheyar
eagai
n:
 1.theov er
all
trendisdown
2.youhav earesistancelevelthatpri
ceiscomingt
o
3.andy ounoticethatthepriceisalsoheadingupt
othef
ibl
evel
is61.
8whi
ch
coinci
deswi ththeresi
stancel ev
el.

WhatI’
vedescri
bedaboveisanexampleofconf l
uence.Aconf
luenceisapoi
nt/
level
in
t
hemar ketwher
etwoormor elev
elsi
ntersecteachother(
orcomet oget
her
)andthey
f
orm aflashpoi
ntorhotpoi
ntorconf
luentpoint
.

Her
e’s 
AnExampl
eOfHowITr
adeWi
thConf
luence
Letmegiveareal
exampleofat
radet
hatIt
ookasIwaswr
it
ingt
his.Thi
sist
hedai
l
y
char
tforAUDUSD. Hav
eagoodandclosel
ookati
t.

 
 

Her
e’swhyIt
ookt
hatt
rade:

1.Ifi
rstdrewadownwar dtrendlineandwaswai t
ingtoseeifpricewoul dcomeup
totouchthet r
endli
ne.
2.AndIalsonot i
cedthatthepr ev i
oussupportlevelt
hatwasbr okencoul d
potenti
all
yactasar esi
st ancelevelcausingpri
cetoreverse.ThereforenowI
havetwot hi
ngscomi ngt ogether.
3.NextthingIdidwast ocheckwhatt hefibretr
acementleveltoseei fpri
cecame
andhitthatresi
stancelev elwhattherati
owoul dbe.Surpri
singl
y,itwas61.8%.
Sweet!SonowIhav e3t hingscomi ngtogether.
Sohowdi
dIt
aket
het
radet
hen?

Iswit
chedtothe1hrt
imefr
ameandwai t
edforpricet
ocomeandhi tt
heconfluence
zoneandsawashoot i
ngstar
,abear
ishrev
ersalCandl
est
ickpatt
ern(al
sosomet i
mes
cal
ledabeari
shpinbar)
.Thatwasmycluetoexecuteashortt
raderi
ghtther
e.

Her
e’si
sacloseupofhowthet
radeset
upl
ookedl
i
kei
nthe1hrwher
eIwaswai
ti
ngt
o
t
akethetr
ade(
seechar
tbel
ow):

Iri
sked50pipsf ort
hist
radeandlaterI
’
m goi
ngtosetthepr
eviousswi
nglowasmy
prof
itt
argetwhichis215pipsandifmyprofi
ttar
getget
shit
s,Iwil
lmake7ti
meswhatI
ri
skedini
ti
all
y.
Updat
e:

Goodt hi
ngasIwasst il
l
ingwr i
ti
ngthi
sguidethi
str
adepl
ayedoutsoIcanshowy ou
whathappened:Asy oucansee, Imanagedtomake138pi
psont hefi
rstt
rade.Note
alsot somadea2ndt
hatIal r
adewhichmade125pipsaswell
.Eventhoughmypr ofi
t
targetwasnothi
t,Iusedtrai
li
ngstoplossasshownbel
owuntil
Igotstoppedoutwhen
pricemovedbackup.

That
’st
hebeaut
yaboutt
heseki
ndsoft
rades:

 Theyarereal
lyl
owr i
sk-
highrewardentr
yt r
ades.
 Theyhavegreatchanceofbeingprof
it
able.

Ther
e’st
woway
syouwi
l
llear
nfr
om pr
iceact
ion:

1.Fi
rstist
ospendhour soveryourchart
sanalysi
ngwhathappenedinthepastand
askingt
hesetypesofquesti
ons:Whydi dpr
icemakeabi gupwardmov efr
om
hereandwhydidpricemakeabi gdownwardmov efrom her
e?Whatpri
ceacti
on
si
gnalsthatf
ormedt her
ethatcouldhavegi
v enanybodyanindi
cat
iont
hatthi
s
 massivemov ewasabouttohappen?Youwi ll
bebl oodysur
pri
sedatwhattypeof
rev
ersalcandl
esti
cksandchartpat
ternsyouwillf
ind!!
!
2.Thenwiththatknowledge,
getbacktothepresentandseeifyoucanseethese
patt
ernsunfol
dinginthecurr
entmarket.

Here’
sanexampleofadojicandl
esti
ckconf
luencewi t
hthedominantdowntr
end,asif
for
medt el
li
ngyoutosel
lthemarketwit
hthetrend.Thi
sshortt
radesetuphad4factor
s
ofconfl
uencesuppor
ti
ngit:

1.Thedojihadconf l
uencewi ththedomi nantdowntrend,asitf
ormedt el
li
ngyouto
sellt
hemar ketwitht
het rend.
2.Thedojishowedacl earindecisi
onbyt heseller
sandt hebuyersther
eforethe
breakoutofthelowofdoj icandlesti
ckwaswhatt hesell
erswerewaiti
ngforto
pushthemar ketdown.
3.Thedojicandlesti
ckalsof ormedbet ween50-61.8fi
bonacciret
racementzone.
4.Themov ingav er
agesprov idi
ngdy namicresi
stance.
Her
e’sanot
herexampl
e:
Now,Icanputl
otsofchar
tsgivi
ngyouexamplesofwhathappenedi
nthepast
…buti
t’
s
bestt
hatnowyouseeandunderstandwhatIam expl
aini
ngher
e,andt
hengoandsit
downandobservewhathappensonyourchar
tsinrealti
me.

All
thisi
nformati
onherei
spr
ov i
dingy
out
hefoundati
on;thebasi
cframewor
kyouneed
totr
adepriceact
ion,
thel
ear
ningcomesf
rom obser
vinganddoing.

CHAPTER16:  TOP2REASONSWHYI
USEMULTI-
TIMEFRAMEANALYSI
SAND
TRADI
NG 
Ther
ear
e2mai
nreasonswhyIusemul
ti
-t
imef
ramet
radi
ng:
 1.Forgetti
ngbett
ertradeent
ries
2.Forreduci
ngstoplossdist
ancesoIhavebet
terr
isk:
rewar
dr at
iowhi
chmeansI
canalsoincr
easetheamountofcontract
sIt
radewit
houtriski
ngmoreofmy
tr
adingaccount…soifmytradedi
rect
ioni
sri
ght,
Imakeal otmoremoney!

Now,
Iwi
l
lexpl
ainbot
hindet
ail
…

HowToGetBetterTr
adeEntr
iesAndSoReduceYourSt
op
LossDist
anceWit
h Mul
ti
-Ti
meframeAnal
ysi
sAnd
Tradi
ng
I
fy ouaretradi
ngstr
ict
lyusi
ngthelar
geti
meframesl
ikethedai
lychar
t,y
ourst
oploss
di
st ancewil
lbehugeandtheissuewit
hthati
syourr
isk:
rewar
drati
ocanbereduced(
no
necessari
lyall
theti
me):

Ri
skt
oRewar
dRat
ioExpl
ained
Si
mpl yput,
investi
ngmoneyi ntotheinvest
mentmar ket
shasahi ghdegr eeofri
sk,
and
i
fyou’regoi
ngt otaketheri
sk, t
heamountofmoneyy oustandtogainneedst obebig.
I
fsomebodyy oumarginal
lytrustasksfora$50loanandof fer
stopayy ou$60intwo
weeks,itmightnotbewor t
hther i
sk,butwhati
ftheyoffer
edt opayyou$100?Ther isk
oflosi
ng$50f orthechancetomake$100mi ghtbeappealing.Sointhatcaseyour
ri
sk:r
ewardratiowil
lbe1:2

Butwhati
fyoudeci
dedt
haty
ouwantt
omi
nimi
zey
ourst
opl
ossdi
stance?

Andev enthoughyouaret
radi
ngwit
hasetupi
nthedai
l
ychart
,fory
ourtr
adeent
ry,
you
areactual
l
yswi t
chingt
othesmal
lert
imef
rameandwatchi
ngf
orasell
signal
int
he1hr
ti
meframe?

Well
,whatI’
vej
ustdescr
i sar
bedi eal
l
ygoodexampl
eofmul
ti
-t
imef
ramet
radi
ngt
oget
bet
tert
radeent
ri
es.

Let’
sst
udyachar
tofwhathappenedi
nthepastt
omakey
ouunder
standwhatIam
tal
ki
ngabout
…

Thischartbel
owisadail
ychartandshowsat r
ipl
etoppatt
erni
nasoli
dresist
ancel
evel
.
Pricehasbeenpusheddowntwicefr
om thi
slevelandwhenthet
hir
dti
mei tpri
ce
reachesthi
slevel
,i
twaspusheddownagain.
Now, y
oucanseethebearishharamirev
ersal
candlesti
ckpatt
ernandyoucoul
dhav e
usedthisasy
oursel
lsignalbyplaci
ngapendingsellst
oporderj
ustafewpipsunder
thel
ow.Andplacedyourstoplossoutsi
deoftheresi
stancel
ineasshownont hechar
t
above.

Buti
fyouswitchedtot
he1hrchartt
owaitfortr
adeentr
y,y
ourst
oplossdi
stances
wouldbeverysmall
incompari
sontothedail
yti
meframeasshownbythechart
bel
ow(I’
vezoomedintogeti
ncloser
):
Now,
let
’scompar
ebot
htr
adesi
nthedai
l
ychar
t:
Noti
cethatf
ort he1hrtradeentr
y,i
twasdonealmostatthever
ytopandthestoploss
di
stancewasv erysmallincompari
sontot
hetradetakenint
hedail
yti
meframe.Which
meansthatther i
sk:
rewardofthe1hrt
imef
ramet r
adeisalotbet
tert
hanwhaty ou
wouldgeti
nt hedail
y.

Now,youcandothi
swi
thdai
l
yti
mef
rameand4hr
sorev
endownt
othe30and15
minut
eti
meframes.

Ory
oucanwatchtr
adeset
upsi
nthe4hrbutswi
tcht
oei
thert
he1hr
,30mi
ns,
15mi
nand
5mi
nsf
oryourtr
adeent
ri
es.

Iof
tenusethe1hrf
ormytradeentr
iesandcanevengodownto5minti
mefr
ameformy
ent
ri
es.I
fyouarenewtr
ader,st
ickt
o1hror4hrti
meframefory
ourt
radeent
ri
es.

Sowheny out
radeinthe1hrtimefr
ame( ormuchsmall
ert
imefr
ame)y
oucanactual
ly
tr
adealotmorecontr
actswithoutri
ski
ngmorebecauseyourst
opl
ossdi
stancear
e
verysmal
lcomparedtothelargert
imef
rametrade.

Forexampl
e,t
hest
opl
ossf
ort
he1hrt
imef
ramet
radei
s20pi
psbutf
ort
hedai
l
y
ti
meframetradei
s80pi ps.Let’
ssaythaty
ouhavea$10,000accountandyour
isk
2%($200)eachtr
ade.I
fy outradei
nthedail
ychar
t,t
hatstopl
ossof80pipsisr
oughl
y
$800sotokeepy ourr
iskat2%t heamountofcont
ract
sy ouwi
llt
radewil
lbe0.
25.

Howev
erI
fyou’
vet
radedi
nthe1hry
oucanbeabl
etot
rade1st
andar
dlot
.

Thissi
mpleexampleexplai
nswhyIwaitpat
ientl
yfortr
adesetupstohappeni
nthe
monthl
y,weekly,
dai
ly
, 4hrt
imefr
amesandthenusesmal lert
imef
ramestogetgood
tr
adeentr
ies.Thi
sisthebeautyofmul
ti
-t
imeframetradi
ngusingpri
ceacti
on.

Letmegiveonemor eexampleofmulti
-t
imef r
ameanaly
sis…AsI
’m wri
ti
ngt
hisbook
(t
hedatenowi s5thofDec2014) ,
IcanseethatEURJPYhasbeenonanuptrendsi
nce
July2012onthemont hlychar
tsandIcanalsoseethatt
hereisr
esi
stancel
evelat
149.115whi
chi thi
talr
eady.Thisist
hemont hl
ychart
:
Now,l
etszoom inonthedail
ychar
tandseewhatt
hepr
iceact
ioni
sli
keonwher
ethe
ar
rowispoint
ing(seechar
tbelow)
:
Ok, Ibegintoseewhat’shappening…soobvi
ously
,EURJPYhasbeenr ej
ecteddownon
the149. 115resi
stancelev
el wi
ththefor
mationoftheshooti
ngstar(
beari
shcandl
est
ick
signal)butnow,Icanseet hati
tsgoingbackuptotestthatl
evel
again.

Twot
hingscanhappenher
e:

1.Pri
ceisgoingtohi
ttheresist
ancelevelandheadbackdown(andIwi l
lbe
wait
ingforabeari
shreversal
candlesti
cktheretosel
lwhenIseeone).
2.Orit
sgoingtobreakitandifi
tbreaksit,t
here’
sasigni
fi
cantr
esist
ancelev
el
aboveityoucanseeont hemonthlychart.
Now,
let
’sgodowni
ntot
he4hrchar
ttoseewhati
shappeni
ngt
her
easwel
l
…

Sonowy oucanseehowIdomymul ti
-t
imef
rameanaly
sistogetdownat imef
rame
wher
eIexecuteatradeatav
erygoodpri
celev
elorent
rypointwhi
lstkeepi
ngmystop
l
ossdist
anceti
ght.

Now,
her
e’t
het
hingaboutl
argert
imef
rames:

“
Theycoveruptradi
ngsetupsthatar
ehappeni
ngi
nsmal
l
ert
imef
ramest
hatcoul
dbe
r
eal
lyr
eli
abletr
adingset
ups.”

Butwhenyouswitchbackandfor
thbet
weent
imef
rames,youbegint
oseehowyoucan
tr
adethel
argert
imeframesset
upsbasedont
hesetupst
hathappeni
nthesmal
l
er
ti
mefr
ames.
Fort
hiseurjpyset upabove,I
’m goi
ngt obesit
ti
ngdownandwat chi
ngi ttoseeifIgeta
bear
ishreversalcandlesti
ckinthe1hrorthe4hr….
it
’sprobablygoi
ngt ohappent oni
ght
i
nmay be4-8hr sti
mebutt hepr i
ceisgett
ingcl
osetothatresist
ancelevel.Ir
eal
lydon’t
l
iket
radingbr eakoutswhereIseethepr i
cehasbeenov er
extendforalongper i
odof
ti
mesoev eni fthi
sonebr eakoutst
ot heupsi
de,Iwil
lnotbebuy i
ng.Iwi l
lbewaiti
ngfor
apull
backtobuy ,i
fthathappens.

CHAPTER17:
  TRADETHEOBVI
OUS
Ihopeyouhav
elear
nthowpower
fulpri
ceact
iont
r ngcanbe.Now,
adi notal
ltr
adi
ng
setupsy
ouseewil
lbecomewi
nners.

Buther
e’st
hething…ifyourl
ossesar
esmall
butyourpr
ofi
tsar
elar
ge,youwi
l
lal
way
s
beinbeouti
nfront.That’
swhyt r
adi
ngr
iskmanagementi
simport
ant
.

Wheny
ouar
ewat
chi
ngt
hechar
tfort
radi
ngset
ups,
youneedseeandt
radet
heobv
ious.
WhatdoImeanbyt
hat
?

Well,
ifther
eisanobv i
ouspat t
ernonthechartandyoucanseei
tclear
ly,t
henyou
shouldknowthattherearethousandsoft
radersoutther
earewat
chingtheexactsame
thi
ngasy ouaredoing…becauseitssoobv
’ ious.

Thi
ngsl
i
ke:

 Trendli
nesorchannel sorbul
li
shpinbarformi ngonmajorsupportlevel
,i
fyou
canseet hat,t
her
ear emanyt hatwi
llbeseeingt hesamething.
 Allt
heset r
aderswillbewaiti
ngtoseewhathappensatt heselev
elsandsayifa
bull
ishhammerf ormsonamaj orsupportl
ev el,
thenguesswhatwillhappennext
?
Themostl ikel
youtcomeoft hatist
hatassoonast hehighofthehammer
 candl
est
icki
sbr
oken,
pri
cewi
l
lshootup!

Tr
adet
heobv
ious!

 
Howmanyt
imeshav
eyouev
erwentov
ery
ourchar
tandy
ouar
eli
ke:

“Goodnessme! Ishoul
dhavetakenatr
adeher
eandlookathowt hemar
ketmov ed
aft
erthatbear
ishshoot
ingst
arcandl
esti
ckwasfor
medafterhi
tt
ingther
esi
stance
l
evel.
”

Wheny outr
adetheobvi
ous,thenyoutradewithwhatev
erybodyel
seisseei
ngandin
essenceyouar
er eal
l
ydoingpiggy
-back,ri
dingont
hemar ketmovecr
eatedbyal
lthese
order
sthatput
stheoddsinyourfavour.

Seechartbel
owforthi
s:i
fyouseeasupportmajorsupportl
eveland pr
icei
sheadi
ng
downtoitandatthesametime,t
hatsuppor
tlev
eliscoinci
dingwithanupward
tr
endl
ine…

Whatdoesthi
smean?That
’sConf
luencebuddy!Andthenyouseeabul
l
ishPi
erci
ngl
i
ne
r
ever
salcandl
est
ickf
ormri
ghtatt
hear eaofconf
luence.

Ar
eyougoingtobeundeci
dedabout t
hispr
icesignal
andpul
lupst
ochast
icorCCI
i
ndi
cat
ortoreal
lymakesur
e(gi
vey ouconfi
dence)youneedt
obuy?
??

Ser
iousl
y??
?

NOneedf
ort
hat
…JustTr
adet
heobv
ious!
CHAPTER18:
  CLOSI
NGREMARKS
Somet
hingsIhav
elear
nt:

 Levelsarenotl i
nesdrawni nconcr ete,theygetbr oken.Yousee,themor eal ev
el
i
st estedmul ti
pleti
mes, soonerorlat eritwill
getbroken.From myobser vati
ons,
2-3timesi stheaverage,afterthat
, expectabr eakoutofthelevel
.
 Don’tlist
ent oanalyst
s.Theycanst uff upy ourdecisi
onmaki ngprocessand
cl
oudy ourjudgement. Forexampl e:Iseeasel lset
uponmychar tbutbecause
I’
vereadt heanalystsreportthatsay shei sbulli
shont hi
scurrencypairbecause
ofthisandt hatreason,Ihesitatet
opul lthetri
gger.Later
,Icheckthechar tand
 seet hatI fIhadsol d, Iwoul dhav emademoney .Sousey ourowni ndependent
j
udgmentbasedonwhaty ouseeony ourchar ts.
 Findy ourbestt i
mef ramet ot r
ade.Yourper sonal it
y,wor kci r
cumst anceset cmay
dictatewhatt i
mef ramey oucanuse.Forme, Icant r adef rom the4hr ,1hrdown
the5&1mi nchar tsbecauseIusemul t
i-ti
mef ramet radi ng.Yes, therewillbe
peopl ethatwi llsay“ Youar ecr azyt obet radingi nthesmal l
ertimef r
amesl i
ke
the5mi nand1mi nut ebecauset here’
stoomuchnoi sei nt hesmal l
erti
mef rames.
”
Yes, Iknowt hat…Thewhol epoi ntofmeswi t
chi ngtol owert imef ramesi sthi t
s:o
getbet tertradeent ries.Youdon’ thavetodot hat ,t
hat ’smyst y
le.That ’
swhatI
l
ike.
 Ifthebusl eavesy ou, don’tchaset hebus!I not herwor ds…don’ tchaset r
ades.If
youar el atetogeti ntoat radeatanopt imal ent rypoi ntandr eali
zedt hatyou
mi ght“mi ssout ”,thenbackof fandwai t.Ther ewi l
l alway sbeanot her
oppor tunityorwai tforar etrace/ retest/
pul l
backet candt henent er.
 Bepat i
entf orther ightt radingset upst of or
m.
 Ifyouar esuf feringf rom l osingst reaks,takeabr eak.Takeaweekof ffr
om
tradingt oclearupy ourmi ndt hencomebackwi t
hacl earmi ndtot rade.
 Ifyouhav ewi nningst reaks, don’ tgetov erconfidentandr i
skmor e.Youst reaks
ofl ossesmaybej ustar oundt hecor ner.