Price Action Many of you have not once met with candlestick analysis, graphics seen such an analysis. This method was also described by Steve Nison. However, some time later came a more perfect way to "read" graphics - Price Action. A new method has become known by many English-language forum, where the trader James16 acquainted us with this method. In this "training manual" describes the main patterns in the trade with a few examples to consolidate. Except for this, it means the use of trend lines, Fibo levels, support / resistance levels (TEP). And lastly, several trading techniques and systems that will help you better understand what is Price Action as a whole. Useful such a "textbook" for beginners as material for study and familiarity with this method as well as experienced traders who want to consolidate their knowledge.
To make it more value from your reading, I advise you after reading the patterns and show examples to fix this in practice, vsmyle most search tools such patterns. Only after many training sessions and analysis, you can successfully learn to read charts and learn from each transaction profits, in any timeframe.
DBLHC (bullish setup) - bars with the same minimums and higher closing. Two (may be three or more) consecutive bars with the same minimum and no closing price is greater than the maximum of the last preceding one. The difference of the minima of adjacent bars should not exceed 3 points. The more bars are setup, the stronger the signal generated by them.
DBHLC (Bearish setup) - bars with the same highs and lower closing. Two (three or more) consecutive bars with the same peaks, with the last closing price below the low of the previous one. The difference of the maxima of adjacent bars should not exceed 3 points. The more bars are setup, the stronger the signal generated by them.
Bullish Setup
Bearish Setup
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Example.
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TBH - two (three or more) consecutive bars with the same maximum.
The difference of the maxima of adjacent bars should not exceed 3 points. Character setup - two-sided. Break the maximum is a strong signal of trend continuation. TBL - two (three or more) consecutive bars with the same minimum. The difference of the minima of adjacent bars should not exceed 3 points. Character setup - two-sided. Break the minimum is a strong signal of trend continuation.
Примеры:
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RAILS - the pattern consists of two adjacent multidirectional bars. That is, for example, the first bar pattern is, for example, bovine, and the second - a bear, if the setup is bullish. For all the bullish setup mirror.
Below are the rules of trade for the bearish pattern. For a bullish - on the contrary. An entry order is exposed just below the minimum of the pattern. The initial stop is placed just above the peak pattern. It should be noted here that. Frequently (approximately 80% of cases) the price after the formation of the pattern rolls back towards the original stop. Rollback can be very significant. But while the rollback does not exceed 50% of the height of the pattern, it is considered a worker. If this level is exceeded, it is better to withdraw the warrant, even a small loss, and look for opportunities to enter later.
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Примеры:
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CLOSING PRICE REVERSAL This template is a frequently encountered in foreign forums, and it is called CPR (Closing Price Reversal). In Russian it would be, roughly, as "U-turn at the closing. " As the name implies this pattern indicates to us about a trend reversal. Strong reversal pattern, especially if there is after a quick motion. Signal bar opened with a break from the closing price of the previous bar, and the opening price is close to the maximum price bar. Closing occurs following the closure of the previous bar, and the closing price is close to the lowest price bar (for a bearish setup). For all the bullish setup mirror.
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Примеры:
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Hook Reversal Occurs at the end of a strong trend signal bar does not go beyond the previous bar. Conditions: a) for the down-trend 1. opening price should be close to the minimum bar 2. closing price should be close to the maximum bar 3. bar should have a higher low and lower high than the previous bar b) for the up-trend 1. opening price should be close to the maximum bar 2. closing price should be close to the minimum bar 3. bar should have a lower high and higher low than the previous bar
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Well, remember that the strongest signals occur after a strong trend. If the trend of sluggish, then the appropriate signal.
INSIDE BAR
Inside bar called a bar, a range which is within the range of the previous bar. In other words, it's a bar, whose maximum is below the maximum of the previous bar, and the minimum - higher than the previous bar. Among traders often abbreviated as IB. A shortening of Inside Bar. Very often you can meet such a designation: I2B, I4B etc. The figure represents the number of bars that meet the definition of inside bar. Bar prior to the internal, is called "defining “or "measuring". As a setup for a trade considered "defining" a bar with an internal (internal) as a unified pattern. Two-way pattern. Can serve as a reversal.
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BUOVB (Bullish Outside Vertical Bar) - bovine outer vertical bar
Signal bar completely covers the previous one, its closing price above the maximum of the previous bar. The entrance is in the breakdown of the maximum signal bar + filter (5-10 points).
BEOVB (Bearish Outside Vertical Bar) - Bear outside the vertical bar
Signal bar completely covers the previous one, its closing price below the low of the previous bar. The entrance is in the breakdown of the minimum signal bar + filter (5-10 points).
Примеры:
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Pivot Point Reversal (PPR) Pattern, consisting of three bars. Occurs, usually after a rapid trend. In a bearish pattern, price, moving up sets a new maximum. The next bar to its maximum does not exceed the maximum of the previous bar and closes below its minimum. In a bullish pattern, price, moving down, sets a new low. The next bar to its minimum does not exceed the minimum of the previous bar and closes above its maximum.
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Примеры:
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Complex Pivot Point (CPP) Integrated core reversal or DAC, there is in places where the price may take some time to reverse. When bearish pattern, the price goes up, forms a local maximum. Then form two bars within the range of the bar, which was recorded a maximum price. The third from the top bar closes below the low bar, which was recorded maximum.
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When bullish pattern, the price goes down, forms a local minimum. Then form two bars within the range of the bar, which was fixed minimum prices. The third from the bottom of the bar closes above the high bar, which was recorded at least. Example
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Move-Congestion-Move (MCM Pattern)
First of all, as any other candlestick patterns, this has greater importance, if there is at large FFs, such as daily, weekly or even monthly. Of course, you'll find it at smaller timeframe, but the market noise, which is so rife with intraday charts, reduces its importance. Ok, this pattern is formed by three consecutive candles and third candlestick is a continuation of the current trend. When I say "continued movement", I mean, this is a model trend-following and therefore we will trade in the direction of the main market trend. Bars that make up the figure should be: 1. Identity is strong, has a long body and short shadows, candle in the direction of the main market trend. This is the first "movement" pattern. 2. Following there is a small candle, maybe even a little candle The adjustment, which shows that the market took a breather and build up strength before further movement. This phase of "consolidation" pattern. 3. Finally, we see another candle with a long body in the direction of the current trend. This is the second "movement" pattern. 17
Here's how it looks on the chart:
Please look at the area marked by rectangle. You see three consecutive candles? This is a typical form of the pattern. In our case, which arose in the chart EURUSD Daily. Pay attention to the first candle. See, what a strong bullish candle? You see how weak and small shadows? It is very important because it suggests that the market is dominated by the bulls. Immediately behind it is a small red candle, a kind of "top", in this case. This means that the first leap up exhausted and the market now needs time to reassess the situation: Is there any bulls strength, to continue to move the market, or on the stage will bear? This little candle, if you look at the intraday chart, is a sideways movement throughout the day. That is why it is called "consolidation" pattern. And finally, the bulls once again show the power and push prices to new highs on the third candle.
Move-Congestion-Move (MCM)
MSM pattern is extremely strong, if the first "movement" breaks the level of resistance / support and consolidation occurs just below this level. As always, a picture can replace a thousand words, so let me show you a screenshot:
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See how the first phase of the "motion" breaks the support level, then the phase consolidate occurs just below this level, and finally comes the third phase as a long bearish candle? This is the best setup is among those that can only arise on the market! This setup has the best chance of success and is my favorite. Let us sum up: looking at the market breakdown of the support / resistance as a long candles with small shadows. Then wait for the formation of a small consolidation candles. If the script is executed, the breakdown of extreme small candles in the direction of the trend gives you a great chance to make a profit in the second phase of "motion" pattern.
The trading range is similar to the pattern "Protrusion", but must consist of more than 10 bars. Usually, between the bars with the 20 th to 30 th, that is in the range 21-29 bar, is a sharp change in prices, and as a consequence, breakdown of the top or bottom of the range set prices earlier.
Pattern 123 Bullish pattern: Point 1 - is the bottom. Point 2 - this is a correction. 19
Point 3 - is the second test a minimum, not amounting to point 1. Bear pattern: Point 1 - is the pinnacle. Point 2 - this is a correction. Point 3 - is the second test of the maximum, not amounting to point 1.Posle that as a pattern formed, place a buy order at t.2 + spread, stop-loss - the size of the spread below v.3
Complex patterns bar Pattern 2 B In his book speculating professionally "Victor Sperandeo, known as Trader Vic, described a very powerful reversal technique. Trader Vic describes this technique: "In an uptrend, if the price touched the previous high, but could not cross it, and immediately fell below the previous high, this means that the trend is about to unfold." The opposite is true for a downtrend. This pattern is also called "spring". 2B setup on the chart resembles a small letter M and signals a possible reversal of the uptrend when the price ceases to create new higher highs. Regulation 2B pattern applies when the price forms a new maximum or minimum, and then significant pullback. After the rollback price of trying to re-formed to test the maximum or minimum. When is testing a "new" high or low is unsuccessful, then it is a signal potential trend reversal. This setup is very powerful and signals the beginning of corrective movements. 2B patterns can be observed in intraday setups for intraday trades to find trendy tops and is very useful. Traders can also be used in the analysis of two nodes and two base amount. If the volume of the second peak or the bottom is less than the first, then it is a signal divergence and the possible formation of 2B.
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Rules for the vertices 2B The market is in an uptrend, and forms a new maximum (maximum of 20 bars), and then rolled back (visible on the graph), which accounted for 5.8 bars. After the rollback price of trying to break through this new highs and closed above it. This bar is called "break-out bar. However, closing over the top "of the breakdown bar" does not happen soon because the price closes below the minimum "breakdown the bar." Thus, the complete formation of the pattern 2B on top. Stop is placed on the recent vibrational peak. The purpose of the vibrational minimum, preceding a new high.
Rules for 2B grounds Price forms a new minimum (a minimum of 20 bars). After the formation of a new low, there is a rollback, which accounts for 8.5 bars. After that the price is trying to return to the previous trend, there is close below the new minimum. This bar is called "break-out bar. However, the further continuation of the trend is not observed. Soon the price closes above the high of "breakdown the bar." The pattern is formed. A long position is opened above the high bar, which closed above the high of "breakdown the bar." Stop is placed under the recent vibrational minimum. Profit target on the vibrational peak that preceded the new low. 21
2B - setup for sale. 1. A new high. 2. Rollback. 3. Bar closes above the high of bar 1. 4. Mark the minimum bar 3. We are waiting for closure under 4. 5. Open short positions under a minimum of 4. 6. Profit target - the previous oscillatory minimum.
Setup for the purchase of 2B. 1. A new low. 2. Rollback. 3. Bar, which closed below the low bar 1. 4. Mark the high of bar 3. We are waiting for closure on 4. 5. Open a long position at the maximum 4. 6. Purpose - The previous vibrational peak.
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A series of patterns on intraday chart The first example - a pattern 2B for sale. A short position is opened at the closing of the bar (3). Targets oscillating at least prior to the bar 1. Stop is placed above the high bar 2. The second example - the pattern on a purchase. Long transaction opens above the high bar 2. Targets placed on the vibrational peak, which was formed up to the bar 1. Stop-loss is a "vibrational minimum" that preceded the bar 3.
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Trading system based on the pattern of "Source " The pattern consists of 3 bars. The main differences are: · Bar number 2 has ranged at least 2 times greater than the bar number 1 or number 2; · Maximum bar number 1 should be above the high bar number 2; · minimum bar number 3 must be below the low bar number 2; · between the minimum bar number 1 and a maximum bar number 3 should be a large space. FF is not working below H1.
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With more careful selection of the pattern can be seen that the bar number 1 is the area of support / resistance, which then sends a signal to enter. The figure below (Figure 1) analyze the possible inputs. For an upward movement formed the source № 1. Just want to note that the bar is number 3 of the source size is the bar number 2, but as the graph shows, he himself worked! Next was founded Channel number 2, and the price has found support in the support area source № 1. Further price tried to return but did not reach the zone of resistance Source number 2 again roll back to the source support № 1. Price walked in this range a few times, and then finding strong resistance moved down and broke through the support of the source № 1. I want to note that the minimum or maximum number 1 bar any source usually is a self-support or resistance levels and sometimes the price makes it a point to point. There is another important observation: the source can be beat as a retreat and at the breakdown. The following illustration shows how it was necessary to act.
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Figure 2 shows how you can beat pattern on the probe. After several attempts to break in support for number 1 failed to break through minimum price bar number 1 Source of number 1 and closed below the minimum. With very high probability of movement will be continued by the amount equal to the distance from the minimum bar number 1 to the maximum bar number 3.
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