AUD/NZD broken through key support level

Price has broken through a key support level on the aud/nzd pair. I will be hunting for a pullback and a bearish price action setup.

 
Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

GBP/AUD 6hr coming into hunting zone

First off the Aud/chf chart I posted yesterday did give us a price reversal but the pin bar on the 6hr chart was not quite valid and so let the trade pass.

Looking at today the gbpaud 6hr charts could throw up a setup, price is retracing back to a good level and I will be watching closely.


Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

The Best Times to look for Forex trades

Whenever we enter a trade on the lower time frame, say the 4hr, we have to consider if it’s the best time to enter the trade and if we have the 'right eyes watching'.

For example, if we took a 4hr setup on the EURUSD pair whilst we are trading through the Asian session would this be wise as Europe and America are not trading? I think not!

Always bear in mind which markets are open and if they can have an effect on the pair that you are looking to trade.

The best time to look for intraday setups on the 4hr charts for most pairs is:

*10.00 and 14.00 GMT (I avoid the 06.00 and 18.00 GMT).

As I am based in the UK, this makes up most of my trading with the final 10pm daily chart being my final time to check for setups.

If you are based elsewhere in the world and want to trade the Asian sessions, just make sure the pair you are trading includes either the JPY, NZD, or the AUD.

Time table for trading sessions:

London - opens at 08.00 and closes at 17.00 GMT.

US - opens at 13.00 and closes at 22.00 GMT.

Asia - opens at 22.00 and closes at 09.00 GMT.

Note: I merge the Syndey and Tokyo sessions together to make the Asian session.

The best time to trade is when two sessions overlap, purely because we have more traders moving the markets.


Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Using Fibonacci Retracements to Trade the Forex

Fibonacci Retracements.

The Fibonacci retracements tool (fibs) is the only tool I use and before I go into how I use Fibs. I want to point out this tool is only used when we have a well established trend in place. Fibs are used by a whole host of different traders across the world, so it can be a useful accessory for us to utilise.

The Fibonacci retracement tool can be found on most trading platforms and will usually show the following common retracements: 23.6%, 38.2%, 50%, 61.8% and the 78.6%.

I only concern myself with the 50% and 61.8% retracement fibs, the rest are irrelevant to me.

So How Do I Use Fibs

When we have a nice trend in place, where a pair is making new highs and new lows. I employ the fibs tool to add confluence to key levels.

Whenever I see a key level has been broken and price pushes on. My radar is switched on to look for a pull back and a price action signal to form back at the broken key level.

I prefer to look to trade strong pull backs because if the pullback is too shallow it reduces the space for a trade to move back into. This is why I scrap the 23.6% and 38.2% retracement, as it isn’t a large enough pull back.

However, the 50% and 61.8% retracements give us much more space for a trade to move into, so these two are the only ones I consider valid.

So I stretch the fibs tool so it sits on the last swing high and last swing low and this will then show us the fib retracement levels. It very easy to modify the fibs tool to just show the 50% and 61.8%, just right click on the fibs tool and change the levels.

Remembering we only use fibs to add confluence if they form in line with a key level. The key level is way more important. Fibonacci just adds strength to the key level.

So I don’t use fibs in range markets, only trending markets.

Below is an example of how fibs retracement tool can add confluence to a key level:




Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Become the Hunter not the hunted

Hunters Routine.

So having a good trading routine set up will enable us to become more professional and consistent about where we look for trades to form.

At the end of every week, I have a weekly review of all my pairs, checking to see if I have the correct two key levels marked, one below current price and one above. I will then highlight any really nice potential key levels where I would like a large price action signal to form.

Remembering that the market has to come to our marked key levels and we then are waiting for the price action signals, turning us into the hunters, rather than the hunted.

Forex trading is all about taking money off other traders that have got it wrong, it’s a zero sum game with money just transferring from one trader to the other. So that’s why we need to be as professional as possible and look to reap the rewards off the undisciplined traders (the hunted).

Being able to patiently wait for setups to form can be a challenge but over time it gets quite satisfying, when you start to see trades forming at your key levels you begin to realise how simple trading can be.

One point I must make though and it’s very important, if we get price showing rejection at one of our key levels but no valid price action forms, we should not get annoyed and wish we had got into that trade.

We need both the key level and the price action signal to get us into any trade.

So What's the Best way to Hunt for Trades?

 

I like to use a price alert program to signal to me when a pair is at a key level, so at the start of the week off the daily charts I will set all my price alerts where I would really like a price action signal to form.

I will also monitor all of my pairs on the 4hr charts using the 10.00 and 14.00 (UK time) and then check the daily close charts at 22.00. So I am not at the charts 24/7, I just come to the charts 20 minutes before the time frames closes but remembering to only enter a trade once the candles closes.

We do not ever enter a trade before a candle closes because the market can turn on its head in seconds and a setup that was visible before can look completely different 5 minutes later. Let the candle close and be printed then set your orders.

If for some reason we get to the charts a bit late and a price action signal has formed where we were hoping, we need to stay calm. If price has already moved past where our entry point would have been we do not try to get into this trade. Let it go there’s always another trade around the corner, we don’t want to get into the habit of chasing the market.

As we have a set of very clear trading rules, the number of trades we take is limited and it can range from 1-10 trades a month. The problems that can arise from the low volume of trades taken per month, can be the inability to enter trades when they form. It’s like your killer instinct for spotting the best trades fades but the best way to keep your mind sharp and ready for those killer setups is to basically print out every trade you take and either make a trade album or stick them up on a wall somewhere, so you can see them every day to refresh your mind what a good setup looks like. It’s all too easy to forget exactly what killer trades look like and this is a simple way to get around this problem.

Summary

 

this article was designed to get the point across that we need to have a set routine. We need to come to the markets at the same time each day and look at the charts like clockwork. We have to stick to our trading rules and only enter trades that meet all of our criteria.

If we can do this, we will be acting in a professional manner and have the key attribute of discipline on our side. Becoming the hunters rather than the hunted is where we can begin to really master trading the Forex.



Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

How to Read Price Action to Trade the Forex.

How to Read Price Action.

Price action is the art of learning how to read and interpret the candles printed on our charts. I have already written an article in the “Basics” section of my website. If you haven’t read this yet, please take your time to read it – Trading with Price Action.

Price action is like a different language and it will take you some time to get to grips with it. Once you begin to understand the reason why certain candles are produced the story of price action begins to unfold.

The candles we look at that form the price action are amazingly informative, the size and shape of the candles can indicate the momentum. So large sized candles with large bodies indicate strong momentum and small candles indicate indecision (weak momentum).

We want to be on the side of the current strong momentum and so using the size of the candles and trading in line with the larger candles is very important.

Impulsive and Corrective candles.

Impulsive candles are very easy to spot, they simply show up as large candles usually with large bodies. So the high and low of the range is large and they really do pop out on the charts due to their size. They indicate strong momentum.

Corrective candles are the opposite, they show up on the charts as small weak candles, they tend to form after a large impulsive candle and indicate a time where the market is taking a breather before moving on.

As the markets are unable to continuously move in one direction, we have to expect price to reverse a little after a big move. The reason this happens is because when the market does make a strong move in one direction, traders who got in on that move have to take profit at some point and this is when we get price reversing or move sideways on us.

So we have defined that the size of the candle is very important and that we want to trade with the current strong momentum.

Candlestick wicks.

Candle wicks, are the thin pointy parts found at the top and bottom of the candles and they too can tell us a lot about what is going on. The wicks indicate where price has been rejected and the larger the wicks the stronger the rejection.

The wicks are our best friends because we can use them to help us mark our support and resistance levels (key levels). It’s not rocket science but like anything it takes practice to convert the candles structure into information we can use.

Check out – How to mark support and resistance levels.

Time frames.

The time frame on which we look at the price action is worth mentioning. The reason being the larger the time frame the more accurate and valid the price action is.

Why?, well if you compare the 1hr chart to the daily chart we have to realise that a candle that has taken a whole 24hrs to form is going to be way more important than a single 1hr candle.

Therefore, we must remember to make sure if we do venture onto the lower time frames to trade, the price action candle we take has to be larger than all of the other candles around it. All too often we will see pin bars or engulfing bars being printed on the 1hr charts but these are what suck in the newbie traders and cause accounts to be drained.

The best way to think about this is to ask yourself – “Does this candle stick out from the rest of the candles and scream out –TRADE ME!!!!”

This simple question will help keep you from taking those sucker trades, we just don’t need to take.

Putting it all together.

Therefore, the candles that get printed help us to read the price action, it’s like a jigsaw puzzle we just have to use all of this information and put it together to get a good picture of what is going on in the markets.

All the information we need is printed on the charts to help us understand what price has done previously, where price has been rejected and what the current momentum is.

No indicator or robot has the ability to do this, and this is why price action is a very competent way to assess the charts and trade consistently.





Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Trading the Forex with Price Action

Why is price action the best way to trade the Forex?

If you are new to the Forex markets you may have already been enticed into using fancy indicators, filling your charts full of colourful lines and curves. Price action trading is completely different, it strips back our charts to the bare basics. Price action charts look clean, easy to read and enable consistent technical analysis of the Forex markets.

 

So what is price action?

Price action enables traders to see all the information presented in a simple and easy to read format using candle sticks. These candle sticks can inform us about the opening price, the closing price, the high and the low of a 'candle', for each specified time interval.

Therefore, price action is a very simple yet extremely powerful technical tool.
The candle sticks have two main structural qualities:
1. The body of the candle - this is the coloured rectangular part of the candle stick.
2. The wicks of the candle - these are the thin pointy parts found at the top and bottom. These are very important as they show us where price has been rejected from. Longer wicks indicates bigger rejection.

Wicks act to help us mark our key horizontal support and resistance levels.

Below is an example of a bullish candle, where price has risen above the opening price. I use white to indicate a bullish candle but you can choose any colour you like.

Next is an example of a bearish candle, where price has fallen from its original opening price. I use the colour black to indicate a bearish candle.

The size of the candle stick can also provide us with valuable information. The simple rule here is the larger the candle the more momentum it possess and so in turn smaller candles indicate weak momentum.

Price action is like learning a new language but once studied it really does give us all the information we need to get a grip on where price has been and where price has been rejected. Thus, support and resistance levels can be marked using the price action on the charts.

Once you begin to follow price action, you learn to spot certain patterns forming. These patterns have a habit of repeating themselves.

Why do these patterns repeat themselves?

Simple, the market is run by humans and as humans we love to repeat ourselves when presented with similar circumstances. It’s just a basic instinct that we all possess.

Understanding this concept means we can use human habits to find trades that have a high chance of coming off.

This has to be taken with a pinch of salt though - although price can repeat itself we should be under no illusion that it's fool proof.

For example, say two trades that looked exactly the same formed one after the other on two different Forex pairs.  Can we expect both of them to have the same outcome - No!

The reality is that the Forex is its own master and can do what it likes when it likes and this is something we must understand. Yes we can use the price action to trade the Forex but the key is to learn how to take high probability price action setups consistently, to gain our edge over the market.

Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

If you want to learn more about trading the forex check out dontlettheforexdriveyouupthewall.com