In Price Action Trading Strategy

There are 2 big levels here:

1.2655 (bottom of 1hr bucket)
1.2640 (intersection of diagonal trendline)

I went long at 1.2656 just in case 1.2640 didnt get hit. Because they were so close together, only 15 pips, it was worth risking the 15 pip drawdown just in case price wanted to go lower and try to grab bids at 1.2640.

If you look at the 1 min chart, you can see price making a jump when it finally hit the level. These kinds of little clues are the type of things I look for. I went long when I saw that, and only missed out on about 3 pips from the very low.

If the diagonal trendline was about 50 pips away, and price broke downside, I would have closed the first position for a tiny loss and waited for the bigger one to get hit. But in a case like this, it makes sense to hold onto the first one.

In regards to why this level was okay for me to fade, price has been crawling down at a slow pace all night, and 5, 15, hourlies are all cooked in terms of downside, and we havent seen any real sizeable retracements in the past few hours. Not to mention its just a big key area in general. If there is anywhere price is going to react, it was going to be around here.

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Showing 13 comments
  • amir
    Reply

    What was your stop-loss, was it 40 pips or less?

  • Anonymous
    Reply

    Thankx a lot for this one. Very good that you gave hints on what else to look for, m1 etc.

  • Steve W.
    Reply

    Hi Amir, I had a static stop loss of -40 in there but either way, if I saw both levels getting violated I would have most likely closed the position for a small loss before it getting taken out. On an area like this Im looking for these to get hit right on the nose…..if it doesn’t I’m likely to close it out if there are no other support levels in the imediate area.

  • Anonymous
    Reply

    Steve –

    How do you determine that you are at the bottom of a bucket before the next bar forms, at which point it sould seem to be too late?

    In the example above, above how can you know that 1.2655 is the bucket bottom before the bnext bar forms to show the reversal?

    thanks

  • Walter
    Reply

    Steve –

    How do you determone that the bottom of a bucket has been reached before the next bar has formed to comfirm the reversal?

    In the example above, how can we tell that 1.2655 is the bottom of the bucket before the next hourly bar has completed, at which point it would seem to be too late to enter at that level?

    thanks

  • Anonymous
    Reply

    Hi Steve.
    -that price level is also based on Bucked that formed ?
    or its not bucked coz its too much spiked.?

  • Steve W.
    Reply

    Hi – This is the top level of resistance in the “bucket”, or the first high of the consolidation in between the two spikes (down and then up).

  • Steve W.
    Reply

    This is just a simple reversal case – if you were to enter upon completion of the hourly bar you would have possibly gotten in too late. Regardless, it makes sense to get in at the peak here as any possible drawdown on this trade would be rather insignificant (15 pips or so); otherwise you risk missing the move.

  • Steve W.
    Reply

    1.2655 would be the bottom the bucket formation -1.2640 is the intersection of the diagonal trendline.

  • Anonymous
    Reply

    Why did you know in the next bar the price could not form a new lower low , or hit the trend line before it went up ?
    Or did you feel that -+ 20 pips from the trend line was the safe zone to buy ?
    Tks

  • Steve W.
    Reply

    I felt it was a safe zone to buy and didnt want to miss the reversal. In my best attempt I tried stating that ‘I went long at 1.2656 just in case 1.2640 didnt get hit. Because they were so close together, only 15 pips, it was worth risking the 15 pip drawdown just in case price wanted to go lower and try to grab bids at 1.2640.’

  • Nigel New Zealand
    Reply

    Hey Steve

    Great Blogg, I notice most of your losses are quite small, do you look for a bounce off your levels immediately? If you dont get a decent bounce do you close quickly??

  • Anonymous
    Reply

    YOUR STRATEGIES ARE …..AMAZING…EXCELLENTS…THANKS A LOT FOR THIS BEATIFULL JOB…

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