Chapter 8 Recap Part I we have at our service the best possible guide we could ever wish for, the market itself, there is no need for a crystal ball to come out ahead. In the lows of the first decent pullback, the three-bar combi 4-5 may have been strategically placed about halfway the 1-2 bull swing, but it was too weak a setup to oppose the rather prominent M-pattern residing overhead (2-3). With such solid obstruction blocking the path, the situation simply called for more buildup. This is basically a variation on the harmony theme, and I can only hope it makes sense. In this respect, the 4-7 block, a W -pattern middle-part hanging below the 50-level, built up the tension in much better fashion. In fact, one could hardly wish for a better setup: (a) its horizontal span now had sufficient body to counter the bearish M-pattern overhead; (b) it was a Ww-variant; (c) the box resided in the 50 percent region of the foregoing bull swing; (d) the entry above it suffered no adverse magnets; (e) should prices at some point after the break have come back to test the breakout, they stood to bounce favorably right on the 50-level support, coinciding with the top of the box. There were two ways to have taken position on the box breakout: either enter on the break of combi 6 (little aggressive still), or one bar later, above bar 7, when the box barrier was visibly broken. A 20 pip target will have been reached before the highs of 2 and 3 were met; should this level have fallen shy, a resistance exit will have been a valid call. When the earlier highs indeed proved obstructive (note the classic false break trap at F), the market went about printing yet another M-pattern middle-part (F-8) . Should we have traded the bear break for failure, above bar 9? It is an easy skip, since it isn't wise to resort to these tactics when the market is no longer in trending mode (despite the bullish dominance, the market was ranging for over four hours). The break above combi 10 is an easy skip as well. There was just too much resistance to overcome for this to represent a high-odds play. 241
Part 2 Evaluation and Management
Chapter 9 Consecutive Intraday Charts In Part 1 of our studies we have covered the essentials of price action on a wide array of educational charts. Like cardiologists, we opened up the chest of the 5-minute frame, cut through the tissue, pushed aside the ribs and laid bare the mechanics of its wondrous beating heart. As we dug in further, we learned all about price action principles and the telling messages within. As our journey went on, we picked up valuable lessons on strategy and tactics, and slowly came to see how all these findings can be molded into a viable plan of attack. Nonetheless, as much as all this can make perfect sense from the safety of the drawing board, a vital question still remains: how does price action trading hold up in practice? While no guide could ever begin to describe the true essence of what it means to trade live, let alone explain the many pitfalls and emotional challenges a trader will surely come to face in battle, this second part of the book is put in to at least give the student a fair view on the continuity aspect of price technical repetition. It can of course be argued whether six months of consecutive intraday sessions sufficiently mitigates the element of cherry-picked material, but there is a limit to what a trading book can do. If nothing else, this unique series of close to 400 charts will furnish the price action student with a massive database of annotated intraday activity. Before we dig in, allow me to point out some basic details regarding this series. First of all, since the eurjusd instrument is traded most 245
Understanding Price Action actively in the EU / UK session and the so-called UK/US overlap (the US morning session) , it is chosen to have the charts reflect this more or less 10-hour window. This means that, in Central European time (CET), the trading opportunities are picked up from the EU Open at 08:00 to about the close of the London session at 18:00. However, the bulk of the preceding Asian session is incorporated also in order to make a technical assessment of the EU and UK Open possible. While our studies are all done on the eur/usd 5-minute, do recall that we used this instrument solely as a platform for price action analysis; all is applicable to any market and time frame of choice. Of course, it will certainly pay to always study the instruments and time frames of your liking with appropriate attention for their personal characteristics, and particularly in regard to the time wnes in which you wish to trade them. As to the latter, the eur / usd pair may very well offer decent opportunities outside the hours mentioned (think Asian Open) , but in order to optimize the educational value within the available space, it is chosen to focus on the instrument's most active stretch. On a 24-hour time axis, the hours in CET can more or less be divided as follows: 00:00-08:00: Asian session. 08:00-09:00: EU Open. 09:00-10:00: UK Open. 12:00-14:00: EU/ UK Lunch Hours. 15:30-18:00: UK/US overlap. 18:00-20:00: US Lunch Hours. 20:00-22:00: End of US session. For the purpose of clarity, the daily sessions in the coming series are divided into three charts each (with sufficient overlap) , starting at the top of a page, ending at the bottom. So each new page represents a new trading day. On six months, this will amount to 132 trading days in total. Since we have already discussed the price action concepts and trading techniques most extensively in earlier chapters, chart explanations are kept to a minimum and are done in annotated format. To point out 246
Chapter 9 Consecutive Intra day Charts entry and exit specifics and some patterns of interest, the following abbreviations are used: pb: pattern break pbp: pattern break pullback pbc: pattern break combi pr: pullback reversal tff: trade-for-failure @: entry somewhat aggressive Res. exit: resistance exit Rev. exit: reversal exit F: false break T: tease Break W: W-pattern middle-part M: M-pattern middle-part Ww: Ww-pattern variant Mm: Mm-pattern variant SHS: head-and-shoulders variant The series will run from March through August 20 12 and basically follows up on the chart examples used in Part 1, which were all taken from a handful of months prior to March. How to view and study these charts is up to the reader, but my advice would be not to concentrate too much on the extent of profits to be reaped from these historical sessions. It's all in the past. These charts serve their best purpose when seen as a thick package of price technical information with which to strengthen your grasp of pressure, buildup, conditions and tactics. While the trade suggestions are offered from the perspective of a 20/ 10 bracket, do not let this keep you from exploring alternative settings that may better suit your personal trading style or management ideas. Furthermore, since the only horizontal markings in the charts are the round number levels of 00 and 50, on occasion it may not be so evident whether a specific trade reached its designated target or fell a little shy. Or whether a stop was taken out in an adverse thrust or 247
Understanding Price Action miraculously survived. Do not let this disturb you in any way. As addressed earlier on, good and bad fortune on any individual wager may have quite an impact on a single session result, but will balance out more or less evenly in the long run. Note: These six months of intraday charts should give a decent impression of average volatility per session in a "normally active" environment, but it still represents a small window of price technical conditions that may not match up with the nature of the present-day environment. Always a common theme in currency land is to see a session go relatively flat in anticipation of a news report and then go haywire the moment the numbers are released, only to go flat again soon after; rarely a week goes by without at least one such stale session printed. From time to time, however, these conditions can persist for weeks or even months on end. Whereas some strategies may thrive pleasantly in a slower climate (think contrarian), breakout traders generally fare less well when volatility and follow-through are minimal. This could call for periodic adjustments. Obviously, one way to adapt is to shoot for smaller targets. But quite popular also is to switch over to a faster intraday frame. In Chapter 11 we will have a close look at how this can be done in a most effective manner. Another excellent remedy with which to counter the issue of a less compliant environment is not necessarily to adjust the plan of attack, but to simply trade more markets simultaneously, and to be very selective on each. Three or four markets will usually do. (Tip: an easy way to add an extra monitor to your home setup is to hook it up via a graphic adapter in the USB port, rather than replacing the standard dual-head card with an expensive triple or four-head card.) To see the benefits of a multiple-market approach, here's a quick preview on some accounting principles to be discussed in Chapter 10. When adhering to a ratio between risk and reward of 1 :2, a winning trade will add 2 "points" and a non-scratch loss will take off 1; should an intermediate trader score an average of, say, a full winner, a full loser and a half 10ser a day, this will amount to about 10 points profit per month (a 0.5 point per day times 20 trading days). If this prospect does not seem too unreasonable, consider also the following. When 248
Chapter 9 Consecutive Intraday Charts increasing unit size on a weekly basis, as will be explained in detail, any account will grow tenfold within the year on 10 points profit per month-provided this hypothetical consistency is maintained on an average of 2.5 points per week, and by risking 2 percent of capital per trade. But of course it is totally irrelevant from what market(s) these 10 points are gathered. On four markets it needs an average score of just 2.5 points per market per month to get the job done. Seen in this light, it's hard not to praise the virtues of trading three or four markets simultaneously, and especially so in a stale environment with fewer opportunities on the whole. The reflection above is not meant to trap the price action student into silly fantasies of points per months and future riches, it mainly serves to stress the importance of always looking at trading from the viewpoint of the bigger picture, or at least from a monthly perspective. Obsessively focusing on raking in a certain profit per day or even per week can only lead to stress and anxiety and that seldom does a trader any good. 249
Understanding Price Action 1 Fig 9.1 al -..-. ProR.amme.com eurlusd 5-minut. March 01·2012 --------------------SHS ------------------- 10 ProRealTime.com 04:00 05:00 0000 0000 09:00 10:00 0: ProReelTime.com 1�00 13:00 14;00 250 07:00 Res.exit in ceiling test missed by a few pip. 0000 ----w-- 09:00 10:00 11:00 1 2:00 13:00 14:00 15;00 18;00 -------M------- @ US lunch hours coming up (18:00-20:00). but the action appears quite lively still 11:00 18;00 1,335 1 ,33 1,335 1,335
Chapter 9 Consecutive Intraday Charts - March IFig 9.2al _.ProReaITime.com eur/usd 5-minute March 02·2012 • ProRealTme.com 04:00 06:00 07:00 09:00 I Bear trend remains intact. / @ pr 10:00 08:00 09:00 10;00 11;00 12:00 13;00 14;00 OPtoReemne.com noo 13:00 14:00 15:00 I Short for fai lure I tff t 16:00 ChoPP')' round number skirmish. Don't look for continuation. ---w --- 17:00 16:00 251 ·1,33 ·1,325
Understanding Price Action IFig 9.3al WoN'N.PrOR83mme.COm eur/usd 5-minute March 05-2012 1,325 Fat bear blocks spells trouble for the bulls Note the false high in the signal bar. 05:00 06:00 0 7 :00 --- w reoo 09:00 - 1 ,31 5 10:00 11:00 , 1,325 Action flattens out in US lunch-hour doldrums (18:00-20:00). 1,325 m - 1� w@ "' .. Pr"" ...... =T!.!! .... "'.com"""- -,-,i------, • .,... OO-----,...,. s:OO------s, :r-OO----1 7OO--- ...,. 8:-----, OO 315 252
Chapter 9 Consecutive Intraday Charts - March IFig 94al www.P.oR •• ITime.com eur/usd 5-minule March ffi.2012 06:00 10 Pf'oReaITime:.cotn woo @ProRealTme,com 13:00 15:00 T oe'oo Note the small candles in US lunch hour doldrums (1 8:00-20 00 CET) ChOpPY sideways action since US Open (15:30) in defiance of 00 level magnet. Just let go. 253 ·1,315 1 ,32 1 ,315 1 .315 1 .31
Understanding Price Action I Fig 9.58 I www.ProRealTIme.com eur/usd 5-minule March 07·2012 1 )2 1,31 4bProR.eelTme.COrtI 0000 01:00 011:00 09:00 10:00 11:00 12:00 OProRellTirne.oom 08:00 11:00 12:00 13:00 14:00 254
Chapter 9 Consecutive Intraday Charts - March 1 Fig 9 .6al www.ProReamme.com eurlusd 5-minule March 08-2012 o ProRealTime.com 07:00 06:00 09:00· 10:00 11;00 12:00 13:00 6 �, 6 O 1'+JJt....:....j.�1!J ...... � ..... :-ff*,.flft;;:f'ii:::I'Wc.::=- �o ;r - - - - - - - - - - '. V ECB interest rate decision at 13:45. If no surprises, reaction can be modest, but steer clear. Speeches usually follow at 14:30. They often OProRealTine.com cause a more hefty response. 1200 13:00 14:00 15:00 16:00 17:00 18:00 255 1 ,325 1 ,32
Understanding Price Action !Fig 9.7al www.ProRealTime.com OProRealTme.com 05:00 06:00 256 eur/usd 5-minute March CJ9..2012 1 Asi an breaks 1 t 07:00 1 ,325 --------w------- 1 .32 08:00 09:00 11:00 1 ,325 1,32
Chapter 9 !Fig 9.8a! _.ProR •• ITima.com aur/usd S-m,nule March 12·21J12 04:00 o ProRe8Time.com 08:00 OProRealTime.com 05:00 06:00 11:00 Bulls set break without buildup. 09:00 12:00 07:00 10:00 T 11;00 14:00 Consecutive Intraday Charts - March 08:00 12:00 15:00 09:00 +0 l,J Q 10:00 ! 00 level magnet holding back the bulls.! 13:00 14:00 HWl 11:00 111:00 257 ·1 ,315 1,31 1 ,315 1 ,31
Understanding Price Aaion IFig 9.9al www.ProReamme.com eur/usd 5-minute March 13-2012 OProReafTme.com 04:00 05:00 06:00 $ ProReelTlrne.com 08:.00 09:00 10:00 07:00 I EU news al I 11:00 CE� I 11:00 08:00 09:00 1 2:00 ·1,32 1 ,31 10:00 1 ,315 1,31 13:00 14:00 1)15 1 ,31 �O����rom� __________________ � ______ ��==�==� ____________________ I� 11:00 12:00 13:00 14:00 15:00 16:00 11:00 18:00 258
Chapter 9 Consecutive Intraday Charts - March IFig 9.10al _.ProRealTime.com eurfusd S-minu1e March 14·2012 Tall signal bar perforates debatable barrier. J.t OM+.J.'i'0 ----l s!� I Bulls build up a block below 50 level I Adverse magnet plus poor conditi ons. 05;00 OEloo 01:00 00:00 @lProRearTime.cam 00:00 10:00 11;00 o ProRealTime.com 12:00 13;00 14:00 15:00 o.ioo 12:00 16:00 13;00 Do not short for continuation. Market is ranging and the 50 level is likely to obstruct passage. 14;00 15:00 ---- w ---- 17:00 16:00 259 ·1 ,31 1,305 -1 ,31
Understanding Price Action [Fig 9.1 1 a\ ww.N.ProReamme.com eurluod 5-minute March 15·2012 150 level range f---. .. 06:00 00'00 ff the ently bar puts in the mini pullback on the pattern line prior to taking out the signal bar. the setup is of better quality (adverse magnet out of the way). ""00 1a:'00 11�OO 1 ,31 1,3 ""o"'_eolT"'ime""'l'''- _____ ----_-----_---- ----- ---- ----r 1 3 08:00 09:00 10:00 11;00 12;'00 13;'00 14:00 pr / pb pbc ". ".�._"." . . ............ _. _._._ - _. - _. _ .... "." - _____ . _ . _ . - _ .... . _ .... . . .. A .......•.••.•. , _. _._.0 ••• _ "._ •...•... _ .•.•• _0. __ .......... __ ..... , @ProRe8Ifme.com 260 In anticipation of top banier breakout 15:00 16:00 1 7:00 ' .31 ' ,305 18JJO
Chapter 9 I Fig 9.12aJ _ ProRealTime.com eur/usd 5·minule March 16·aJ12 T 05:00 01:00 Lengttry bottoming pattern from 08:00-1 3: 15 (SHS), with Ww-pattem bui�within. Consecutive Intraday Charts - March Sometimes it's hard to tell the difference between a reversal block (middle-part) and a Mag pattem. There is no escaping the occasional rev. exit trap. skip ! 1+.0*0 oioo 10:00 '1 ,31 1,305 1,315 1,31 � ProRealTime.com ___ ---- ---- -------' 1 305 08:00 10:00 1":00 1 1:00 12;00 13:00 14:00 i Strictly seen, this is a long setup, but it is very high up in the rally and the pullback correction is very shallow. Also, the bear block to the left needs to be cleared (traded for failure) and the US lunch hour doldrums are coming up (around 1 8:00). Good reasons to lay Iow an this long offer. 17:00 261 1 ,315 1 ,31
Understanding Price Action IFig 9 1 3al wwwProRealTime.com eurlusd 5-minute March 19-2012 "'. ®ProRealfme.com moo 0<:00 MOO '" ProReafTime .com 0000 09:00 IFig 9 13cl Failure to breakthrough on one side of a range often sets the stage for a successful break at the other end. 0000 07:00 08:00 10;00 11;00 12:00 13:00 09:00 14:00 1 +?O� " f+��Oft+�.L660'+9't. Both entries are valid The �J second IS stronger. / +.� 1200 1 �:OO 1.;00 15:00 16:00 17:00 18:00 262 ·1,32 1 ,325 1 ,32 ·1,315
Chapter 9 1 Fig 9.14a 1 www.ProRe.lTi�e.com eurlusd 5-minute March 20·2012 OProReamne.com 0200 IFig 9.14cl _ moo 0<:00 05:00 @ The W·reversal breakout failed to follow through, offering the bears an opportunity to short from higher levels. Trade is still a bit aggressive, because of the W·element within the pullback. 0900 . 1 0:00 Consecutive Intraday Charts - March 11:00 07:00 Weak pullback. Adverse magnet of 25ema and possi ble ceili ng te t 0900 Annotated as aggressive because a quick retest of the OO-Ievel and the 25ema would jeopardize the stop. It's always preferable to have these magnets "out of the wg.j' prior to entry. @ pbc .�� T '�oo --M-- !� :;r:::'�::;";:'':''':'' 1 r� still in position at this stage. exiting is always an option. OProResmne.com ,zoo ,�oo 14:00 15:00 16:00 17:00 18:00 263 1 ,32 ·1,325 1 ,325 ,1,32
Understanding Price Aaion !Fig 9.1 5a\ www.ProRealTime.com .urlusd 5-monut. M.rt:h 21-2012 '10$°'6. �/J OProReaITme.com reoo 07:00 ""00 09:00 09:00 10:'00 11:00 12:00 13:00 1,33 + '+rTf 1,325 \ magnet \ ,++. 10:00 11:00 12:00 ""VC:-e-ry-a-g-g-re-s-C-i s v-e-C-sho be ause the en7:try is nearing--,----, ·1,33 the lows of the bear-fiag and the 25ema is not really helping out. The ceiling test level (little horizontal line) could start to pull adversely as well. The 1 .32 level is a favorable magnet, though. ----- w---- 15:00 ·1,32S 1�2 1 Do not short for failure ·1 1,32S o ProReerrme.com 13:00 14;00 15:00 16:00 17;00 18;00 19:00 264
Chapter 9 IFig 9.16al _.ProRe�ITime.com eurlusd 5-minute March 22-20t2 O+Tlo=6-1-i.!.o. Qlo J. ---- o ProReaITiI'tIe.can 03:00 04:1:10 05;00 06:00 o ProReetTine.com 08;00 1(ioo 11:00 Consecutive Intraday Charts - March 0'- 6",*,+ ",�tl + "� 07:00 00:00 00:00 Annotated as aggressive because it counters the tali bullish powerbar. However, with the trend unmistakably bearish, a little aggression may be called for. \ 14:00 265 1,325 1 ,32 1 ,325 · 1 ,32
Understanding Price Action 1 Fig 9 1 7a 1 www. ProRoammo.com .ur/usd 5-minuto March 23-2012 07:00 IFig 9.17cl b;;;:thi·············· ...... . EU Open (08:00) aims to defy tile Asian break below tile OO-Ievel. O +i Ijvening-star I 06:00 O 'It.. . l •. � '---"""'--'-l-t-' � �p U Too aggressive from +.Q where we stand. 06:00 0!t00 10:00 -M11:00 12:00 ? + l' i �;ojl)blt!l,tTT 0!t00 --W--pb W-pattem middle-part in 50 percent retracement of the opening bull ralty. 13:00 Very tall bars ruin tile technical picture. There were no trade opportunities arr{l'V2tl. Just let go o P\"oReeITine.com 12:00 13;00 14;00 15;00 16:00 17;00 16:00 266 '1.325 1 .32 1,33 1,325 1,32
Chapter 9 Consecutive Intraday Charts - March !Fig 9.18al www.ProReaITime.com eur/usd 5-minute March 26-2012 II ProRealTime .com 0.:00 05:00 06:00 IFig 9 18bl 10 ProRealTime.tom 06:00 09:00 1�00 1200 13;00 14:00 07:00 +, 1Qoo \ Dont short against the box \ ���. skJp crfo+.-o4T 1 0 �� ' 8 11:00 12:00 13:00 i tff @ ·1 ,325 11:00 � 1 ,33 1,325 1 ,32 141:00 Not a fan of this one either. It is always a bit tricky to enter long in the high of a rally with the US lunch hours coming up. Quite aggressive to long the bear break for failure at this stage of the rally. Adverse magnets of 00- level and 25ema could easily kick in. Not myfavo rite setup. 15:00 1&00 17:00 1 ,325 1B:OO 267
Understanding Price Action !Fig 9.19a! ..-ProReafTime.com .ur/usd S-minute March 27-2012 04;00 05;00 07;00 (l8;00 Bears in position are well advised to exit on the upside break of the combi inside bar (strong adverse magnet of 50 level). --w - • �=-++-..,. - - -,� p-- -- - ---------"'O�ljj Also, don't be too eager longing In Res exn In the dotted line If the high of a range, and take heed not yet on target on the short. of the 50-level (could start to pull '1,335 , ,33 ' ,3-1 ',335 ���� T���oom�� ______ � ________ = a�==er = e� ============ � ________ � ________ ---- ,33 (l8;00 oaoo 11:00 12:00 13:00 14:00 ',3< I Ug� chop. Just stay out. I o ProReeIfme.eorn '200 13:00 14.00 15:00 16:00 17:00 18:00 ,9;00 268
Chapter 9 Consecutive Intraday Charts - March IFig 9.20a I www.ProR •• ITime.com eurlusd 5-minule March 28-2012 03:00 10 ProRealTime.com 01:00 06:00 o ProReeiTine .com 12:00 04:00 09:00 13;00 05:00 06:00 01:00 150 level tug-o-war I 11:00 1200 ''':00 15:00 16:00 1 .34 T 1 ,33 06:00 09:00 Bears appear to be winning the fight, but it doesn1 really look like the round number situation is fully resolved yet. _ M2kiP !. t 1 ,335 1 ,33 13:00 14:00 1 ,335 I skip shorts I 1 ,33 17:00 18:00 269
Understanding Price Aaion IFig 9.21al IWIW.P,oRealTime.com ou'lusd 5-minute March 29-2012 04:00 05:00 06:00 07:(1) 06:00 09;00 10:00 13:00 '4:00 15:00 270 I Fat resistance I --Mm-- Squeeze a bit thin in regard to the total span of the pattern. ""00 10:00 12:00 13:00 Depending on how this played out. it IS possible to have been shaken out by the entry bar itse�. 14:00 16;00 17:00 18:00 1,335 1,33 11:00 1" .335 1,33 ·1,325 1,335 1�3
Chapter 9 IFig 9.22e I """,,.ProReaITime.com eurlusd 5-minute March 30-2012 04:00 06:00 07:00 Consecutive Intraday Charts - March 00:00 ---Mm--- 06:00 10:00 Probabty makes for a nice scalp into the 50 level magnet, but doesnt realty qualify for a 20 pip wager. 1 ,34 1 ,33 1 ,34 �O����'��T��� ____ � ____ � ____ � ____ -r_�==== =====-_ _�_ � 08:00 09:00 10:00 . 11:00 12:00 13:00 14:00 1 ,34 1,33 11:00 1200 13:00 14;00 16:00 17:00 271
Understanding Price Action IFig 923al �.ProReamme.com eur/usd 5·minule April 02·2012 skip I weak si gnal I 1 ,33 04�OO '"'00 06:00 OHIO 00:00 09;00 moo 11:00 1 ,335 06:00 09;00 1();00 11:00 12:00 13:00 14:00 '''*'bWl'-�=--- ·1,335 ----'--------- 1 ,33 OProRealTime.COIt\ 12:00 13;00 14;00 15:00 16:00 17;00 16.:00 272
Chapter 9 Consecutive Intraday Charts -April I Fig 9.24a I ........... ProRe.IT,me.com eur/usd 5-minute April 03-2012 o ProRearnne.COOl 0000 07:00 • ProRealTlme.com 08:00 ""00 .................................. 1'+; ....... . IOH, @ProRealTine.com 1200 1100 10:00 00:00 09:00 1�00 ----------- S S----------- t ···························· ··· ·················· ·�t�t .... In the light of the beansh developments, we shouldn't worry too much about the bottom barrier here . 11:00 13:00 14:00 12:00 ------------ W------------ Powerful combi sets up the right leg of the W·reversal. Too early to trade long, though. 14:00 15:00 16:00 17:00 18:00 273 1 ,34 1 ,33 1 ,335 1 ,335 1 ,33 19:00
Understanding Price Action I Fig 925a I www.ProReaITime.com eur/usd 5-minute April 04-2012 t.m <>----1 bear trend I I�[).I cP"'--� @ProRetiTlnc.com 04:00 06:00 oaoo cillO 10:00 11:00 12:00 1 3;00 --M -- 1,315 --w -- 1,31 1�00 14:00 ,5;00 1�.00 17:00 - 16:00 19:00 274
Chapter 9 Consecutive Intraday Charts -April IFig 9.26al www.ProReafTime.com eur/usd S-minute April 05-2012 4- DT�t+6"""''''' t o ProRe8lrrne.com 04:00 05:00 • ProRealTrne.com 08;00 09:00 12:00 13:00 .I. ...... 06:00 +'1".1. ... - 07:00 0000 09:00 ,noo 11:00 12:00 13:00 14:00 t5;OO 16:00 17:00 1.32 1 ,315 ••• ' I .� 1 ,31 10:00 11:00 1 ,315 1 ,31 pb / pr / tff � I:::: O-'-l-e"l-"' -ag-n-t"l 1 .:lOS 14:00 ·',31 ' ,:lOS '6:00 275
Understanding Price Action 1 Fig 9.27al _.ProR.amme.com eur/usd 5-minute April (l;.2012 o ProRealTme.com 0<:00 05:00 06:00 'i' • ProReaITiMe.com 00:00 10:00 11:00 • ProRealfrme.C:Om 1200 13:00 1·1;00 15:00 276 07:00 00:00 10:00 12:00 13:00 News spikes can realty mess up the chart. In most instances, it is best notto engage, particularly when the news Hipped the chart from bearish to bullish (or vice versa). Not too many traders will play for continuation, which lowers the odds for follow-through 16:00 11:00 18:00 1 ,31 1,JOS 19:00
Chapter 9 I Fig 9.28a I www.ProReaITime.com eur/usd 5-minute April 09-2012 OProReafTime.com moo 04:00 05:00 00:00 o ProRealfme.com 09:00 10:00 11;00 1200 When a pullback ruins the prospects of your trade, but doesnt yet shake you out. an a�emative entry could be to eXIt around break even if given the chance (for example on a mini correction back to the 25ema). Try not to chicken out, though, if the trade has reasonable chance to work out still (not likely here). o ProReelTlne.com 14:00 15:00 16:00 Consecutive Intraday Charts -April 1,31 jr 1 ,:lOS 07:00 08:00 09:00 1,31 1�00 14:00 15:00 1 ,315 1,305 16:00 19:00 20;00 277
Understanding Price Action Wig 9.29al www.P,oRealTime.com eu,-usd 5iminule Ap,il l[)'2012 02:00 03:00 II ProRealTime .com 0/00 Wig 9.29cl 1+ flProRealTirne,com 13:00 278 ()5;00 10; ' 00 OI��1!+. t O � 14:00 15;00 ()6;00 07:00 moo Looks real� nice in hindsight, but these kind of countertrend breaks often fail for 20 pip. Accept on� if the reversal exit option is part of operating tactics. 1 l ' 00 Don't trade a countertrend break for conti nuati on. R� l 16:00 17:00 18:00 " 19:00 1�15 1 ,315 1 ,315 1,305
Chapter 9 IFig 9.3081 www.ProRealTime.com eur/usd 5-minute April 11·2012 t OProR�me.com 03,00 04;00 05,00 OEtOO o ProRealTIme.com 08,00 09:00' 10:00 1 ski p shorts I OProReamne .com 1200 aoo 14:00 15:00 07,00 Consecutive Intraday Charts -April T Still a bit tricky. having to trade away from the 00 level magnet. oe,oo 09:00 11:00 1200 16:00 17;00 10:00 13:00 279 1 �15 1 ,315 1�1
Understanding Price Action I Fig 9.3181 www.ProReamme.com eurlusd 5-minule .Aj)riI 12·2012 oo Dl'�""'¢.!.�'P"'�".��� ::::::::-- ���-- ���� • ProReelfme.com 04:00 06:00 01:00 ----w--- 06:00 09:00 11:00 06:00 pbc @ 09:00 '''00 Hi gher bottom after double bottom is a bullish sign. 13:00 14:00 1,315 1,31 I us lunch hour doldrums I 1,315 OProRe.lrrne.cotn 1200 noo 14;00 15:00 16;00 1 1:00 18:00 19:00 280
Chapter 9 Consecutive Intraday Charts -April IFig 9.32al www. ProReaITime.com eurlusd 5-minute ApnI 13-2012 1 ,315 03:00 0<:00 �:OO 06:00 07:00 08:00 I Fig 9.32b I 1 ,32 1,315 ---- ---' kip o ProReeiTirne.com oaoo 09:00 1fr.oo 11:00 12:00 1·tOO 1 ,315 1 ,31 1200 13:00 14:00 15:00 16:00 17:00 18:00 281
Understanding Price Action I Fig 9.33a I www.ProRe.lTime.com eur/usd 5-minute Apnl l6-2012 0200 07;00 --- o ProRealfme.COIT\ 1200 1 3:00 282 / Market very bean sh in early Asian session IfalseLI pbp @ 1 4:"00 15:00 05:00 00:00 10:00 16:00 Powerful pullback is unpleasant, but the breakout bar was even more powerful. An option here is to stay in the short in the hopes of a favorable bounce in resistance. 07:00 moo 09:00 1 ,305 · 1,3 11:00 12:00 13:00 1.31 1,3 17:00 16:00 1 9:"00
Chapter 9 Consecutive Intraday Charts -April IFig 9.34al _ProRealime.com eur/usd 5-minute April 17-2012 04:00 05:00 08:00 --M-- • ProRealTime.COIT\ 08:00 09.00 10:00 13:00 1·tOO 15:00 Atw1f'{S a bit tricky to trade <NIfI'I from a round number ri ght before the UK Open. Be quick to deploy a rev. exit if necessary. 07:00 08:00 -M - EU Lunch Hours 11:00 13:00 1 juS! let go I 16:00 11:00 HI:OO 1 0:00 14:00 19;00 283 1 ,31 1 ,315 1 ,31
Understanding Price Action IFig 9.35a I I Fig 9.35bl • ProRealTme.com 06:00 I Fig 9.35c I " ProReaIr�.cam 12:00 284 �.ProReaITime.com 04:00 09:00 eur/usd 5-minule April 18-2012 06:00 07:00 No real entry p reM ded to play the pullback reversal In secon d instance. . 10;00 12:00 - w -- 14;00 16:00 08:00 09:00 1 ,31 1�00 1(:00 1 .31S 1 ,31 1 ,305 1 7:00 1�00
Chapter 9 I Fig 9.36a I www.ProRe.lTime.com eurlusd 5·minule April 19-2012 .. .Pr�me.c:om 02:00 nOll 04:00 05:00 OProRe!'llTime.com 06:00 09:00 10:00 11:00 13:00 14;00 15:00 Consecutive Intraday Charts -April • 06:00 07:00 Too much overhead resistance 12;00 16:00 T F 11:00 08:00 Too little buildup to short low of range. 09:00 13:00 14:00 16:00 285 1 ,31 10:00 1 ,315
Understanding Price Action I Fig 9.378 I www ProReamme.com eur/usd 5-minute Apnl20-2012 03:00 06:00 I Fig 9.37bl 0.0. .,.. 07:00 06:00 1 .31 oioo ,:: c",:ProRe=.rr ",ime=£om _�-:-____ ____ � _____ _____ ____ � _____ ,..-J Ai06] 07 00 08:00 09:00 10:00 11:00 12:00 13:00 O Pra:realTme.CO/'I'I 12:00 1 3:00 286 Rev. exit on the long if not on target already 14:00 15:00 16:00 14:00 Trading for failure is best done on a first pullback to the 25ema, or else in a very trending market When done in the highs of the session, with the 1 ,32 US lunch hours coming up short� and with an ad· verse magnet on the lurk (00 level), the prospects 1 , 315 for a substantial break are much less promising. 17;00 18:00
Chapter 9 Consecutive Intraday Charts -April I Fig 9.38a I v.ww. ProReaITime.com eUllusd 5-minute April 23-2012 .... 'i".,. 1 ,32 Asian range breaks in EU Open 1,315 03:00 05:00 06:00 07:00 �oo o ProReliTime.com 07:00 1 ,32 1 ,315 --w-- ---- w---- 1 ,31 ""@""Pr","" ine","",,- ___ --,-, ____ ��----�---_ I momlng-starvanant I ___ -----' 12:00 13:00 14;00 15:00 16:00 11:00 1aoo 287
Understanding Price Action I Fig 9.39a I _.ProR.alTime.com eurlusd 5-mlOUle Apn1 24-2012 I Tight Asian range I • ProR:eelTrne.com 02:00 cioo 04:00 01:00 OProRealrme.com 288 First hour of UK session was traded very ti ghtty (generalty more livety) Thi s may not break for 20 pip. 06;00 moo 13:00 14:00 05:00 15;00 06:00 pb 01:00 Remember the Asian range on the 50 level magnet. If you accept this short. consider taking profits in the round number. 11;00 12:00 13:00 15;00 17:00 18:00 1,32 1,315 ·1,32
Chapter 9 I Fig 9.408 I www.P.oRe.lTime.com eur/usd 5-minute April 25-2012 Very thin Asian ranges are often broken falsety. Best to wait for the EU and UK Open to bri ng in some volume fi rst. Consecutive Intraday Charts -April skip skip Bullish dominance under pressure. Strong adverse magnet (00 Level) 1 ,325 ","' oR""..rr =ine"" ___ � ___ ---:-: � ____ ____ ____ ____ � __ -.J'1 315 00 00'00 0700 09:00 1Qoo 11:00 o PtoRealTIme.com 00 '00 09:00 10:00 11:00 'tl'*t?t� w---- 1200 13:00 14;00 15:00 Repeated failure of the bulls to reach the 50 level above. 16;00 11:00 1:100 1�00 , 14:00 289 1,325 1 ,32 1 ,325
Understanding Price Action I Fig 9.41a I IWIW.ProRe.lTime.com eurfusd 5-minute April 26-2IJ12 o ProReaITime.com 00:00 09:00 10:00 ----- ----- 11:00 13:'00 1.:00 � ��tt • .,. i. • U Y-- �", �t+ft!�;...-- ---'�r.---:�:::-"" == ;;::;I ",, IJ 0. '. I skip longs I l' � ·'t t( ��O 1f'l T U· T'T""":j1 r Market just broke � from the beari sh gri p. Do not yet look to trade for bullish continuation. o PrcRealTine.eom 1200 14:00 15:00 17:00 16;00 290 19:00 1,32