UPDATE ====>>》》Trade Closed for +7 Pips.
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Chart shows test of EMA and rejection and that also was previous swing. Price started to consume the sell orders and also keep checking the demand with the test of EMA. At the time of entering price pullback to check the strength of trend & post strong bullish candle and the test of orders at this candle was reason to find bulls again.
Hi Readers,
I have been testing a system based on price action support resistance to trade for Intraday scalping & result of previous couple of days are quite encouraging. I've practice on more than hundred of mechanical systems in my trading career of over 9 years but non of them is profitable except couple of them which I've shared with you earlier & I would like to share the antanomy of trading forex with EMA. h3 What is EMA & why support and resistance is important to filter trades.First of all, I would like to tell you that EMA is the average price of past number of candles and its concept quite vague without the help of price action & support and resistance. Ema actually is used differently for different pairs as different pairs react differently on EMA settings for different period so you should always check back history with different EMA settings to see which settings should be used for a pair which is trending.
While trading EMA one need to make sure to use technical indicators like trendline, candlesticks & accurately mark support and resistance on two time frames higher than time frame you are trading. Marking support and resistance is important to set stops and targets as without its use you cannot develop any profitable strategies no matter how accurate systems you developed.
Chart I posted above is gbp/usd chart, and EMAN settings I used for this chart is (72,20) SMA to close. This is a perfect example of how PA should hold when trend is picked up. There are arrow marked when EMA reject the low values and EMA is providng strong value and value shifts higher. There was one break below EMA which was yesterday and immediately after that close we saw a strong outside bullish bar to reverse the prices higher again clean and high probability trade came when US market was about to take over London market.
When market test the EMA we already had breakout of a bullish flag & that time we were entering the most productive market session and target was daily high at 1.3438 & entry came at 1.3385 which was above the yesterday. If you move down to m5 chart you would see the outside bullish bar contained 13 pips, which breaks above a falling trendline and that was our entry point. You can easily set your stops below the swing low of that rejection or few pips below yesterday high and get good reward for your scalping trade & that is how price action with support and resistance should be traded with the help of EMA.For Intraday scalping in Currency trading, one should always look to use pivots or good support and resistance or fibonacci tool or trendline if it is providing good support and resistance. Always look to trade logic with good risk reward. Although I don't consider this method a completely one dimension mechanical system but still aim for good rewarding trade increase the probabability & help in money management calculation.
I would keep updating the blog for next few days with some scalp on different pairs and would also update you if there is any other filter that can be used with this power combination of EMA price action support and resistance method.
Its been quite a while since I talk about the trading education, busy with my new scalping experiments but still the prime motive is to let everybody aware to where to look price action. Price action zones are the best way where to look for reversals. I always look to trade reversals in forex as I always look to jump into the trend on pullbacks keeping in view monthly, weekly & daily supply and demand zones.
Below I have posted Australian dollar h4 chart which is trapped between zones and looking to take stops both sides of the market. When a pair is trapped between rallies drops and drops & rallies then we should always wait for the unfilled orders after market hit the next extreme.
Price is capped between two zones below the historic level 0.7730 which holds the price down for two years. When price look to stay time below or above a level the reaction to these levels are imminent as first attempt to this level bulls rallies to 0.7900 area, but there was lot to come when you shift to monthly level which clearly shows a false bull candle and I would now keep a watch on monthly trend line perhaps to the end of this month and see if price react again with the same approach on daily & hourly time frames.
Buying euro @ 1.1902 for retest of 1.1935 with stops around 1.1870
Trade is valid till 2 hours after european open & if target is achieved within that period then we will close the trade immediately.
Expect a test of cap around 1.1935-40 area which hold till New York open & when it was breached with a false breakout price tumble & now I expect yesterday lows to hold the price for retest.
Target hit trade close at +30 pips 2P.M (+5:30 GMT)
wait for this cap to hold the price above 1.2680
Note :-- Price capped around this area bullish move from 1.2715 can extend for stop hunting but will be limited to 1.2730 and that is protective stops are around 1.2735
Target 1.2690 is set to the origin of up move and first engulf of price action zone.
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I would like to see more Price action to unfold if we see a test of 1.2040 as failure. Price really capped between two zones 1.1650 to 1.2040 & if get entries both ways then I would surely look to post an update.
Trading is not only about entries as it depends on how you manage your risk. There are several entries are always on offer but do we need to take or consider all of them even as to practice or check trades ?
Understanding price action is way beyond making consistent profit. You can analyze multi pairs at a time to make best use of the entries on offer but we must think of the risk we are taking on so called cherry trades. There is no doubt that big players, banks and institutions manipulate traders as they can push the price in any direction but as a retail trader we must accept the fact that our trading activity should be limited considering the fact play a waiting game.
-As far as my trading is concerned, I usually don't trade too often as I don't have to but if there is a reward of 15-20 times of the risk and reaction don't let me wait for weeks for choppiness then I always put the foot on the paddle. Higher time frames does help but if even they are looking direction then I don't bother to look at daily activity.
-Forex trading is somewhat different in a way that it can move in a week from downtrend to uptrend but as we know market trends 30% of the time and we have to take decision that when we enter market trends should resume or keep moving the way it was earlier.
Daily time frame is good area to watch as I told.in my previous post. Price action does require fuel to trend and there are some late entries when targets are reached and happens stop hunting before another big players resume the trend and this type of activity is usually done within a month.
Its has been quite a dialema that what price action. Is it a self-emphasis trader's curse. Trading price action is something like analyzing top to middle level management and then the quality of the product itself telling the story.
Top to down analyzation is meant by looking at monthly chart to see who is in control and looking to weekly determines the strength of the recent moves and daily is very good for entry level and nothing below that I have ever traded nor recommended.
Daily time frames downtrend or uptrend is most of the times is temporary as 22 daily candles consists of one monthly candle and imagine a powerful uptrend or downtrend on daily finish as a dozi candle on monthly.
We make things complicated by day trading isn't we ? I hereby will help you understand the top to down trading analysis filtering the quality of trades that we must take.
As you see in the chart above,weekly trend is up. Several higher highs followed by fail to make a new low. Rejection at trendline tells us that price will probably look to pick up strength soon atleast on lower time frames.But still there has to be a reason to catch the reaction with entry which offers good reward. I still expect price to make a new high soon above 1.7600.
Price reacted at support which is also the source of previous down move and it was also completely ignored in the upmove as we can expect weekly and monthly moves just use to ignore lower time frames orders and trading higher time frames use to wipe those whispaws from your trading. Take a look at the chart.
