Every candle on the chart is part of a PAZ of one form or another and knowing where price is in relation to these zones gives us a massive edge on the markets. Up until now, we have been taught nearly everything we need to know to be successful traders, PAZs PAZs really are the last piece pie ce of the puzzle. o let!s get started" o what is a Price P rice Action Zone# A P PAZ AZ is e$actly what it says% it!s a zone on your charts that show a distinct type of Price Action" &hese distinct zones zones include poles, flags, stacked supply'demand supply'demand and compression. (nce we are able to accurately determine where these zones are, there is one rule. ONLY trade trade the edges" (ne great type of PAZ is the space between two )ailure to returns! *)&+, which is the space in which a flag forms% let!s look into this a little further-
ou can see in the above chart / have marked off 0 )&+!s as price climbed up, between each one of these )&+ we have a PAZ. o we have 1 PAZs. imple as. (nce price breaks into a PAZ *engulfs a )&+ we know it wants to go to the other side of the zone *the ne$t )&+. o let!s look what happens on the way back down. 23
)&+ 0 gets engulfed, price has now gotten into PAZ 3. Price retraces then goes to )&+ 1
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)&+ 1 gets engulfed, price has now gotten into PAZ 4. Price retraces then goes to )&+ 5
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)&+ 5 gets engulfed, price has now gotten into PAZ PAZ 6. Price retraces then goes to )&+ 7
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)&+ 7 eventually gets engulfed and gets into PAZ 8 and follows through to engulf )&+ 8 and )&+ 6 and gets into PAZ 5. Price retraces before going to )&+ 4 )&+ 4 gets engulfed *see insert 4. P rice retraces then goes to )&+ 3
9ow that you know where price wants w ants to go, it is your :ob to enter on a retrace to target the other side of the PAZ *the ne$t )&+, and we already know how to do this don!t we# PA" Hi rcmacf ! as far as I undrstand This are only assumptions by this moment, please correct me if I am wrong, some of these say the same but expressed in a different angle Situation = Assumption Image 1
1"A #A$ #A$ is tested for the first time and bounces bac% to pre&ios 'T( or #A$ #A$ = )e expect price to retest it, and touch or engulf next 'T( *"A 'T( 'T( is engulfed= there is no longer S+ here, )e expect our next 'T( to b e touched or engulfed, redraw if needed only if price changes trend." A new 'T( is created = )e redraw a new 'T( and #A$ //////////// image *
0"A 'T( is touched, = ) e wait for reaction , #A, #A, basically engulfing or bouncing
////////////// and finally images . and 0
" Another way to read a trend is by price crossing between #A$ doesnt apply when a #A$ has 2ust been engulfed3bro%en and retested -
)hen price mo&es down through our #A$4s #A$4s we create new 'T(s on the way through, these 'T(s in"turn create new #A$s, #A$s, it is these new 5ones that can be traded on the way bac% up, hyoga seems to ha&e highlighted this in his diagrams 6ach 'T( is simply drawn as your would draw a supply3demand le&el The le&els that aren4t exactly clear in this T' are more distinguishable on 7T'4s 7T'4s I really hope all this ma%es sense
Here4s how I am mar%ing in the #A$s, based on my current understanding I4m lea&ing out cp#A$ cp#A$ until I4&e got a handle on the 'T( #A$ #A$ I4m using the same chart area as abo &e, so we4&e consistency #eds, am I getting there8 1 'irst I mar% in the 'T(s I see These I ta%e to be an engulf a new high in this case- showing intent to go higher, then the fail to go lower It does not become a true 'T( until price then mo&es higher than the initial higher high So, for example, 5 does not 9ualify as an 'T( as y is a few pips lower than x it is a cp#A$ cp#A$ edge, but I4m not going near those yet- I4&e used a little red ellipse to show the tips of the 'T(s
* I then mar% in the demand 5ones or supply if mo&ing down- which the 'T(s represent :y indi mar%s those created abo&e current price blue, and those below as pin%- These are going to become the targets on the way down " the 'T; to the 'T(, essentially
. Then it4s a case of watching what price does The engulf at 1 means expect price to go to * engulf 1 also engulfs an '7 to the left of the top elipse, and should ha&e you primed and ready for point A to happen " it is ignored demand becoming supply " an S( flip- The engulf at . means expect price to go to 0 The engulf at means expect price to go to <, whiche&er #A$ edge that leads to next If you were sharp, you could maybe get in at ;
And see how the the influence continues continues
Hi :yst There certainly is a lot to consider when loo%ing for a good entry 'irstly 'irstly your H1 and :1 le&el really 2oin up to be the same, but from a broader &iew of your 9uestion I understand this may not also be the case nfortunately the 9uestion you ha&e put forward does not ha&e a specific answer )hat I can tell you howe&er is this Too Too many traders, e&en those who ha&e pic%ed a great entry get %illed because they ha&e an unrealistic target >ne may pic% a le&el on an :1 chart which isn4t aligned with a HT' le&el- and try to target a le&el on the H0 or + which is going to get the a 5illion pips and to their surprise they get stopped out when they may ha&e been able to ta%e *? or .? pips if they were realistic and targeted a m1 5one instead The >@7 thing thing that will tell us what le&el is going to b ring us down through to another le&el after an engulf is #A alone 7ets say price ma%es its way bac% up to your mar%ed out :13H1 le&el at B1ish which also seems to ha&e some nice history- #rice starts to form some wic%s which tells us selling is happening, and we manage to enter with #A at a nice C: @ow realistically price can &ery much ma%e its way bac% down to the next ftr, which also happens to be the start of a compression #A$ #A$ ;ut, we ha&e to ensure that #A is supporting the mo&e down If we drop from the m1 le&el and start forming some nice supply on the way to our target, then great, we can hold ;ut, if some supply gets engulfed north on the way down before the tg is reached we may want to exit at an a ppropriate le&el and ban% some pips
So to sum it up, we ha&e to loo% for appropriate #A at each potential le&el to gi&e us an opportunity to go short If we don4t get it at the first :1 5one, then the next le&el seems to be a nice cap and C: on the daily that we can wait for I can post some charts if need be, but I h ope I ha&e summed it up Hiya :yst, I understand where you are coming from To To be completely honest with you, when I ta%e a touch trade, it generally means I am being la5y! I also accept it is not going to be as high a p robability compared to waiting for #A #A Also when I ta%e a TT I usually only do so with a &ery tight stop and a really good profit margin which was the case in that A short in post .?D ;ut conformation is always better As for my own own trade management " I am still getting getting used to Eletting Eletting my winner runE which at the the moment is the most most important obstacle to get past for me )hat I li%e to do is monitor my trades on a lower time frame as they come to supply3demand le&els and then see if any flags get engulfed in the opposite direction, this way I can get out with some pips before price turns too far bac% I also place a &ery big emphasis on S( le&els, for example, if there is a &ery nice flip 2ust abo&e a flag I will let let price engulf and react to the flip flip before I made a decision on exiting exiting They will will &ery often hold hold price Here is an chart example for the last statement
I4m still learning some of this stuff, so please ta%e it with a grain of salt! #eds xyogi, I feel it is important to clarify a few things here
1 'T( is not an alternati&e to S+ trading, no no!
It4s enhancement!
3
* the name E'ailure to (eturnE does not stand for Efailure to return to supply3demandE 'ar from it!!! )hat it means is Efailure to return and ma%e another HH or 77E or E'ailure to continue in the original directionE Thus, your comment regarding 'T( F is irrele&ant 'T( A7)AS (6T(@S T> S##73+6:A@+, what4s more, the existence of 'T( itself pro&es that Suppy3 G+emand is present see the diagram- If it was not, no 'T( could be made, the price would simply continue in the o riginal direction +oes it ma%e sense8 It thin% this is &ery important
;ut not always the the Suppy 3 demand is so apparent in the chart as in 'T( F example In the 'T( 'T( F scenario, the the price engulfed the last demand of the down leg, but failed to continue in the direction of the down leg there was strong demand for the instrument The demand was much stronger than the supply )ho can be the source of such a big demand8 eah, eah, the big guys were hungry Another interesting interesting thing there there was an early indication indication that price price would want to to re&erse loo% at the 'T; to 'T( ; ; can u see it8 . As far as I %now, the term E'T(E is uni9ue for (T:, howe&er, howe&er, the concept is uni&ersal 'or example, some traders outside (T: call it Ehoo%E 7es/#aul
Hi #aul, reat ! 6xcellent explanation I re read your explanation many times and meditated on that yes that is yogis path- )hate&er i thought i tried to put on the diagram attached#lease loo% at this Fan you see A, this is a &alid 'T( because it has engulfed another 'T( on the leg up @ow my 9uestion on this 1To 1To become a &alid 'T( to trade, it should engulf another 'T(, not 2ust demand3supply88 * @ow point A is an 'T( and also 'T; to supply abo&e , so we short sell here ;ut + is a 'T; to 'T( "A , and we short again Is that correct8 If correct , my 9uestion is , point A already consumed the supply abo&e, point + is in fact *T; to the supply i agree it is 'T; to 'T(, but o&erall picture tells me it has reached the supply that has been already touched As a S3+ traders , *T; is a less probability probability trade Fan you shed some light on this .@ow lets say if F engulfed ; we should %now mar%et is going to re&erse right8 Again than%s &ery much
Hiya 'xyogi 'rom your diagram it really seems you are getting your head around the 'T( 9uite nicely )ell done In reference to your 9uestions, 1 (emember that a 'T( is in itself supply or demand So yes, to be considered a ftr it must first brea% a high or low or supply3demand * @ow this is an interesting 9uestion #oint A 'T( does not necessarily ha&e to be a test of another le&el, price may &ery well not ma%e it to a le&el of supply3demand before it fails to return ;ut e&en if it does reach a supply or demand le&el it is still a 'T( If you read about and study how compression forms you will see that it is exactly that Supply3demand traders consider the second time bac% less probable, but we are mo&ing much further than simple Supply3demand traders . This is correct, but only to the next ftr Also Also consider where price can retrace to before it ad&ances to the next 'T(, and also why Hope this is of some help #eds Hi Andy, I don4t %now if you4re a Sam Seiden fan, but I %now I was and thought I found the holy grail in him, and I started li&e trading it with no success! I then thought to myself as you probably ha&e, there :ST be something to gi&e me a hint or a clue as to whether a S+ " S( 5one will hold or not, that is when I found (T: recommended by a freidn who also trades, it4s a pu55le, but once you fit the pieces together, ;>, ;>, I bet that is a feeling so great that its unimaginable, that is my moti&ation, as I am sure it is yours too A few more examples examples
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