TARGET

AREAS
lesson 8
streettraderfx
 Theory Part
Lesson 8: Target Areas
Target areas are important because they also serve as a an
additional tool for directional bias.
This is simply identifying where there is liquidity which the

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market is most likely to go to.
That's why its vital to understand where you are targeting.

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Why are targets very important?
Targets are important because you don't want to be greedy
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and sty too long in a winning trade and end up having it as a
losing trade.
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You want to be able to understand where the market is likely to
go to in order to have a clear idea of whether the setup that is
presenting itself to you is falling within your trade criteria or
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not.
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Primarily all the criterias of your trading system should all be

present before you enter a trade as this not only shows
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discipline but builds consistency long.

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Your entry criterias based on the lessons being provided

should fall within having an understand of: (Acceptable Risk,
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Valid Stop Levels, Fixed Risk to Reward, Clear Targets, Clear

Entry patterns being presented to you etc.
 Different types of target:
The market offers different types of target and as the market
conditions change from being bullish to being bearish or to
either being in a consolidation, it's important to understand the
different types of targets as the market will only present certain
target clearly in certain market environments over the other
market environments.

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Types of targets:

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-Double Top/Double Bottom
-Demand/Supply
-Imbalance
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Consolidating/Contracting Market
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As you can see for this discussion we have Double Tops and Double bottoms
outlined under a consolidating market environment because this is a market
environment that has a lot of indecision about which direction to take.
In most cases the market creates double tops/bottoms in order to
accumulate orders that it can later use once a lot of liquidity is gathered for a
particular direction either bullish or bearish.
 Double Bottom
Double bottoms are easy to identify - You simply look for two lows which are
close to the same price level where price found support.

The idea behind having double bottoms as targets is that there are stop

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losses resting below the lows so what we anticipate is the market trading
below the lows to take out the stops.

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So if we can manage to get in a sell before the double bottom(stops) is/are
taken out then we will know where price is most likely to trade to.

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 Double Tops
Double tops are easy to identify - You simply look for two highs which are
close to the same price level where price found resistance from.

The idea behind having double tops as targets is that there are stop losses
resting above the highs so what we anticipate is the market trading above
the highs to take out the stops.

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So if we can manage to get in a buy before the double tops(stops) is/are
taken out then we will know where price is most likely to trade to.

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Always remember that it does not matter which entry pattern you get for entry.
If you see double tops/double bottoms you wait for the market to show you the
entry pattern then you work with the entry pattern that the market offered you
and not what you force the market to give you.
 Imbalance for Targets
When the market is trending - It's either the market is bullish or bearish.
And in most cases in trending markets we see the market creating
Imbalances which will then be traded back towards later on in the market for
their closure in order for price to be balanced.

As you can see on this scenario where the Imbalance was used for targets
after price finding support and printing out a reversal structure that then
gave us an entry.

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Bullish Setup with Imbalance as Target

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Bearish Setup with Imbalance as Target

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