Method is quite simple actually. Note that this is a method and
NOT A STRATEGY.
We are looking at S/R levels. Now most people cannot identify a S/R level properly. Below are two statements that are always true in any market. Always have been and always will be.
1 . A S/R level is identified where price is rejected
MORE THAN ONCE at a level/Zone.
2 . A Support if broken becomes Resistance and vice versa.
3. Support/Resistance are more of a Zone , rather than a particular price point.
4. These will also act as potential targets.
Understand the above points clearly. The S/R levels can be clearly seen on my charts.
Next, we see Price Action(PA) , PA is simply bar patterns on the S/R levels.
The bar patterns include(in order of significance and usage)
1. Pin bar
2. Outside bar
3. Inside bar
Pin bars and Outside bar are very common,easily identifiable and they occur frequently on lower TF and not so frequently on Higher TF.
The PA confirms whether we should enter a trade or not. We do not take trades blindly based on S/R levels.
So basically we identify a good S/R levels and look for
confirmations and confluences at that level.
PA gives confirmations. Confluence can be anything from below
- Fibs levels(50%)
- Pivots
- Trend Lines
- Moving Averages & Crossovers
- MACD Divergence
- Round Numbers
- Harmonic patters
- Gann
- Conventional Chart patterns
- Fib Patterns.
If we get both a confirmation and at least two or more Confluence , we have a
very very high probable trade setup and
these are the ones we must take and nothing less than this.
I m sure most of you know this material S/R, PA. This info has been available since ages. Nothing new here. But
what is important is how to apply this knowledge on charts. This is where many people fail.
Lastly, its patience. The key to finding a good setup is Patience, Patience and more Patience.
So, we will start off with basics(S/R,PA) and then move on to slightly advanced method(PA Confirmation & Confluence).
So in summary , this method is
S/R + PA Confirmation + Confluence + Patience = Profits!!
Let me know if you have any questions...more charts next week!!
