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Forex Profit Encryption

Predicting Future Price Movements Without Indicators

Wesley Govender

Forex Profit Matrix ©

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TABLE OF CONTENTS

RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT .................................. 2

I. Introduction ....................................................................................................................... 4
II. KEY PATTERNS AND CONCEPTS............................................................................... 5
A. 1-2-3 Price Moves ....................................................................................................... 5
1. The Highs.................................................................................................................. 5
2. The Lows .................................................................................................................. 7
B. Full Price Corrections .................................................................................................. 8
C. Trend „Landings‟.......................................................................................................... 9
D. Ranging Price Movements........................................................................................ 11
III. Forex Profit Encryption Setups .................................................................................... 12
A. FPE Setup With 1-2-3 Highs/Lows ........................................................................... 13
B. Encrypted set up in ranging markets ........................................................................ 14
IV. Trading The Profit Encryption ...................................................................................... 16
A. Trading The 1-2-3 Highs/Lows ................................................................................. 16
1. Buying The Lows .................................................................................................... 16
2. Selling The Highs ................................................................................................... 18
B. Minimizing Loss With FPE Correction ...................................................................... 19
Conclusion ......................................................................................................................... 20
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I. Introduction

What is Forex Profit Encryption?

Forex profit encryption is not a system but a trading tool that will help you predict
price movements with amazing accuracy and no indicators!
Here, I am going to introduce you to an insider technique that not many traders know of
or can use. Counter intuitively, the chart reading skills that you will learn here are rather
simple; and, they have existed ever since price charts themselves have existed.

Forex Profit Encryption brings to light a pattern that is created by the human psyche and
the ways in which the human psyche reacts in response to price movements. The price
movements in the Forex Market are dictated by the rather simple principles of supply
and demand.

This is what allows large hedge funds and insiders to engineer price moves with
strategically placed large bids. And, this is why these price movements reflect the
sentiments of the majority of the traders. If you can understand the psychology of the
traders and learn to use it, the way insiders do, and then you can predict the future price
movements of the market knowing how majority of the traders will react to the current
price movements.

Many generic indicators allow you to analyze the current market situation and only
mirror the price actions that are happening without providing much useful information
about the future. However, Forex Profit Encryption will teach you how to trade a position
risk free by covering your costs of entering the trade and predicting the market
accurately. It is ideal for traders who easily succumb to information overload and/or
cannot deal with a rainbow of indicators because Forex Profit Encryption is a
technique that does not use indicators. You will be able to predict the price
movement and minimize the loss simply by looking for patterns and incorporate the
Forex Profit Encryption technique with other systems, to confirm trends and can also
trade with just this technique.

So let‟s begin learning…

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II. KEY PATTERNS AND CONCEPTS

A. 1-2-3 Price Moves

One of the patterns that you must look out for while using the Forex Profit Encryption
method is the 1-2-3 high and lows. This pattern can signal a trend reversal.
Once you know what you are looking for, it is likely that you will find the pattern
everywhere. 1-2-3 Highs and Lows do occur quite frequently and you will spot them on
almost all time frames. The lower time frames are very choppy and the signals from a
1-2-3 price move pattern on, say, a 1 hour chart is going to be much more reliable than
a on a 5 min chart.

There are certain instances when this pattern can be ignored but we will explore that
later. First you must learn to recognize the pattern.

1. The Highs

The 1-2-3 price move pattern is only of value when it

occurs at the end of trend. Even though it is a trend
reversal spotting tool, sometimes you will get false
patterns in a ranging market or the trend may
continue.

The 1-2-3 high may signal the end of an uptrend.

A typical 1-2-3 is formed when, in an up trending
market, the price makes a final peak. This is known as
point (1). This point is the last bar to have made a new High during the up leg of the
latest up swing.

The price will, then, show temporary retracement and proceed downward for a few bars.
Point (2) is formed when a full correction takes place and the price starts to move up.
Point (3) is formed when the small move up also experiences a full correction and the
down trend begins.
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So in summary, prices can take up to three bars to correct a move down and form point
(2). After which, the price moves north. A full correction forms point (3). This pattern in
an uptrend is seen at the end of the upwards push and is known as the 1-2-3 high.
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2. The Lows

During a down trending market, a pattern similar to the one discussed above is seen at
the end of downwards moving trend. This is known as the 1-2-3 low. Remember that the
pattern is only of value when it occurs at the end of a trend. Of course you will only be
able tell this in retrospect; do not act on the patterns if you have indication that the trend
is likely to continue. Now, let‟s take a look at the 1-2-3 low itself.

The pattern occurs when, during a down trend, a bar makes a last lower low before the
price starts to move up. The bar that makes the last lower low becomes point (1). The
price will move up until it makes a full correction for a temporary downwards move. The
bar before the correction is made becomes point (2). The temporary move downwards
ends with a full correction, a trend reversal, as the price begins to move up. The pivot
bar, after which the full correction is made, becomes known as point (3).

Point (1) is the last bar to have made a new low.

Price then moves upward forming new higher highs and higher lows. If a lower high or a
lower low is formed, the bar preceding this move becomes point (2). It does not matter
in which order this happens as long as it does not take more than three bars.

Price should then make a full correction, with one bar or up to three bars making a
higher high and a higher low, after a potential point (3).
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The trend from here is expected to move upwards.

B. Full Price Corrections

A full correction occurs when the price reverses its direction. This is signaled by the
bars forming a new high and a new low. A full correction can occur in a single bar or can
take up to three bars. Note that the third image is not a full correction because the price
takes four bars to reach a new high.
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C. Trend ‘Landings’

A trend landing is a resting place for a trend. It is a temporary ranging movement that
occurs in the midst of a trend and not at the end or beginning of it.

If the price is moving upwards or downwards, it may come to temporarily rest itself at a
level. This looks much like landings in a flight of stairs; it isn‟t an end of the trend but
rather a resting place. In other words, prices move to a landing and then breakout. You
can expect the breakout to be in the same direction as the trend, which is most probably
going to continue.
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A landing is a price bar pattern that is formed by pair of matching highs and matching
lows. The matching highs must be separated by at least one bar and the same goes for
the matching lows. A landing does not last for, and should not be, more than 10 bars. If
it is longer than that, then you might be looking at a ranging market. Within these 10
bars, you might end up two or more pairs of matching highs and two or more pair of
matching lows. In such cases, you can use the latest movement to make a judgment.

Note that the matches for a trend landing don‟t need to be perfect. The highs and the
lows should approximately equal each other. Three pips, more or less, will serve as a
good rule of thumb when you might be expecting a trend landing.
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D. Ranging Price Movements

A Ranging Market (above) is the easiest pattern to spot. It is essentially and extending
landing that can last anywhere between 20 to 30 bars, or even more. They are
characterized with close support and resistance levels. You can generally expect a
ranging movement to breakout in either direction somewhere near the 30 th bar.
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III. Forex Profit Encryption Setups

There are a three essential ways in which the patterns above create the trend FPE
setup. The trend FPE set up confirms the trend reversal and the new trend that is hinted
by the 1-2-3 high/low formation.

The trend encryption set ups, which you should watch out for, are formed when:

1. The first correction after a ranging market breaks out into a trend in either
direction.
2. First correction after a ledge breaks out in a trend
3. First correction after a 1-2-3 high or low formation breaks out into trend.

The FPE set up occurs because traders, in a trending market, like to periodically take
profits. This periodic profit taking is seen as corrections in the trend. In the examples
below, you can see that that the trending market makes moves in the opposite
directions for a few bars (corrections can last up to three bars) before continuing with
the trend.

Once the price breaks out into a trend in either direction, a correction occurs when the
price fails to make a new high or a new low.
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A. FPE Setup With 1-2-3 Highs/Lows

A 1-2-3 formation generally signals a trend reversal. In other words, a 1-2-3 high is often
followed by a down trend and a 1-2-3 low is often followed by an uptrend. Once you see
this pattern, it should serve as a reasonable confirmation for the direction the market is
heading in.

Note that you are not looking for a full correction here. Double tops, where price fail to
make a new high or a new low during a trend, are also a correction and can lead to the
encrypted set up patterns. Price will most likely break out in the direction of the
preceding trend after this pattern.
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B. Encrypted set up in ranging markets

Trading in a sideways moving market

is a challenge.

Oftentimes, greedy traders will make

a trade in a ranging market only to
see a few pips worth of movement.
One of the challenges is to know
when the ranging sideways market
has begun a trend.

A sideways moving market can be

classified into three different types – a
landing, congestion and a ranging.
Each one is classified by the length,
i.e. the number of bars the sideways
movements last; a landing being the
shortest with trading ranges being the
longest.

A price „landing‟ occurs amidst a

trend, by definition. It is a temporary
resting place for a trend. A landing is
where the price temporary rests
before breaking out into a trend
again.

If you encounter a short 10 bar landing (of the type described above), then you can look
for the encrypted set up to confirm the breakout.
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In a ranging market, you can look for a break out between the 21st and the 30th bar.
Market ranges are characterized by close support and resistance levels. Narrowing
ranges are likely to last while broadening ranges are much more likely to break out.

In order to confirm a trading range breakout, one should look for a 1-2-3 formation
within the ranging market followed by the FPE Correction pattern (which can confirm a
pattern.

These encryption set ups are well defined patterns and are not subjective. They are
either there or they are not. You can learn to identify them and, subsequently, have a
very good idea of where the market will be heading.
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IV. Trading The Profit Encryption

Knowing where the market is heading is half the battle. You must also know where to
enter the market. Lowering the risk and minimizing the losses of every trade you enter is
one of the ways you will increase the profits. After being introduced to the 1-2-3
highs/lows and the FPE correction set up patterns, you are probably wondering how this
can help you decide upon entry points.

A. Trading The 1-2-3 Highs/Lows

1. Buying The Lows

The 1-2-3 is a common pattern that is seen quite frequently and which, generally,
implies an impending trend reversal. Traders vary in how they like to trade. An
advisable way with which you can reduce the risk of trading is by placing part of the
position at the potential signal. A strategically placed entry should allow you to minimize
your costs should the market go against your bid.
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Take a look at the price move charted above (above). If you enter after point (3) is in
place at price level marked (a), when the price moves through point (2), then you can
have some certainty that the trend is reversed.

In other words, during a down trend, buy when the price moves through point (2) once
point (3) is in place.

Also note that the FPE correction pattern is an

excellent indication that the 1-2-3 low was pointing
towards the right trend. The minor correction shows
that traders took profit and created the minor
correction. Notice that the price continued to move up
after the FPE correction.

Of course nothing works a 100% of the time but it is

possible to trade with better predictions of price
movements using 1-2-3 highs and lows.
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2. Selling The Highs

Similarly, the 1-2-3 highs (see example below) indicate the end of an uptrend and a
trend reversal. Once point (3) is in place, it is a good indication that the trend is going to
move downwards.

In order to minimize risk, enter a part of your position after point (3) and then add to the
open position after the FPE Correction set up, which confirms the downward trend, after
a 1-2-3 high. In case the 1-2-3 breakout was a false one, the move towards the
correction will allow you to cover the costs of the trade and maybe make some profit.

Note: The number (3) point does not go as high as (1), 1-2-3 high, or as low as (1), in
the 1-2-3 low, in both cases. It is only important to enter trades when prices move
through the entry level and not if they gap over. You will have to watch for this scenario
especially if you are using a daily chart.

1-2-3 highs and lows are essentially tops and bottoms or at least a 50% correction
during a trend.
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B. Minimizing Loss With FPE Correction

The Forex Profit Encryption Correction

allows you to predict the price movement
each time you see the FPE correction, with
incredible accuracy.

However, once a Correction is in place, the

price is likely to dip and the breakthrough
the FPE correction point. The result is that
a lot of orders get bunched up, from traders
like us, at the peak before the correction
occurred.

Insider traders and large hedge funds, seeking to take profit, will sometimes engineer
the price towards this level for their benefit by strategically placing orders that are higher
than the market price. Once they are done taking profits, subsequent selling causes a
failure and reveals this move to be a false break through.

Therefore, from the correction, one should try to buy into the potential break out while
ensuring that there is enough space between the correcting bars and the latest peak,
that the trade costs are covered and some profit can be made (take a look at the grey
vertical lines above). The result is that even if the FPE correction leads to false
breakout, you will be able to get out of the trade without a loss. In essence, it would
have been a free trade. This turns that mathematical advantage towards you.

The FPE corrections are likely to signal a continued trend, and if they don‟t, the trade
will cost you nothing. By minimizing your loss, you are keeping your profits and this is
how you can increase your monthly percentage return.
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V. Conclusion

In summary, you must remember the patterns that have been discussed above. With
these definitive and precisely defined patterns you will be able to predict the direction of
the market without any indicators. It will be wise to use these patterns as a secondary
confirmation with a system.

The 1-2-3 highs and lows are frequent patterns that will help you locate breakouts from
ranging price movements and trend reversals. They are only important when they occur
at the end of a trend. The 1-2-3 highs and lows can also occur during a market moving
sideways and signal a break through. One problem that many traders have is knowing
when the sideways movement is at an end and when to be looking for an entry.

This is where the Forex Profit Encryption Correction can come into play. They are
correction patterns that occur after a few bars of breakout and are the result of traders
frequently wanting to take out profits. This pattern is there and has always been there
because the prices are ultimately dictated by supply and demand principles.

If you are going to trade with consideration to the FPE correction pattern, then you need
to always assume that there is collaboration between the large players and inside price
engineers who try to manipulate the prices to run stops/orders, that they know are there,
in order to get profit. Using the FPE correction peak strategy discussed here, you can
essentially make sure that all your trades are, at least, free. In order to maximize profits,
you simply reduce the losses.

Many indicators reflect the market and help you analyze the present situation. However,
there is no analysis tool like the human mind and simply by looking at the charts, you
can now start predicting the future price movements instead of looking at the past and
analyzing the present.

Hope this report will help you significantly in your endeavor to trading success. Enjoy!

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