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Hi everyone!
I will share my price reading journal here, hopefully, you will find it insightful.
Every idea and opinion are merely the author's observations through 4 years of studying charts and BPA. so please do not accept anything but rather question it!
this is especially useful for those of us who are interested in swing trading.
So let's together inquire into these charts!
Best wishes
Ali
Trends almost always develop at some kind of SR (Support and Resistance)
Prior Highs & Lows FBO are the most important ones for me.
So swing traders will patiently wait for these levels, watching carefully how the price approaches them and how it will react.
Let's have some recaps of what happened yesterday!
I usually trade US30 (CFD) but here is SPX as well
arrows on my charts are just indicating signal bars (not entry price) so I assume everybody knows the entry will be 1 tick above the signal bars (for stop order traders)
So let's continue our inquiries about swing formations.
Yesterday was a bull bar Closing near its high and was an H2 Signal bar on the RTH daily chart. (on both SP & Dow) therefore RTH HoY would be a significant TG.
Globex Highs and Lows are acceptable FBO Levels (LQ) for Reversals if there is a reversal pattern and SOS on these levels. also, there is a 90% chance one will be taken out during the session.
finally, TG (target) is the most important element while swing trading. I usually Target Prior HTF Highs and Lows, also my second tool is MM TGs.
we'll talk about TG a lot in this journal. TG means where the price is likely going to go. One MUST determine the TG before entering a trade.
This is my favorite Dow Jones: ) I took the 1st setup, and 3 R/R had simply finished my day.
ES had more or less the same story too.
EURUSD | Recap
❗Trapped Traders are the market fuel
An interesting swing trade Idea based on HoY/LoY happened on Friday:
Note that this is not quite EoD Markup with all ideas & trades, this is more of a trade idea and price reading and hopefully, it is what has actually taken place not merely the author's opinions about the market.
Let's see some beauty!
ES | Recap
📝 Swings usually develop at 3 specific times of day:
1. Open Swings (Opening Range MM is a typical TG every single day): is the first 2-hour
2. MDR Setups which is: Midday Reversal or Resumption of the Open Trend: Bar 38-44
3. EoD BTC/STC: the last hour of the day - usually the last 30min
Beautiful MDR (Midday Reversal) has formed yesterday on ES
Dow has done it too after HoD FBO
SR(LQ) Levels discussed in this journal til now: LoY/HoY/GXL/GXH/Bottom & Top of Channels
LQ stands for Liquidity and will be used more in this journal. As Dr. Brooks has written in his TR book chapter 15, the chapter is about Stop-Hunt and Liquidity
So Don't be shocked if this term will be used in this journal.
Note that arrows are above and below the Signal bars, not the entry bars
EURUSD | Recap | HoY-LoY
📝 Highs and Lows of yesterday have great Potential to generate good-size swings. if the general market context on the daily chart is bullish or one-sided, you may expect a successful BO above HoY. While, if the overall market condition is not clear like EURUSD the last couple of days, TTR Bars on the daily chart, or lots of tails and Reversals on the daily chart then one may look for Reversal patterns at HoY/LoY FBOs on LTF charts.
A day full of successful swing trades: EURUSD | Last Day Of Month Tuesday
The market will likely continue to be bearish in the next few days too. As it's an L2 PB to EMA on the Daily chart with a pretty good SB COL, the Market will probably take out April's low, unless today is a bad FT for the Bears!
SPX CFD | Early LoD
One of the key concepts for swing trading is Early LoD and HoD. If the daily bar is willing to COH and become a buy signal bar it will usually have to form an early LoD, or the daily bar lower tail. If the daily chart bar is willing to be a bear bar, it usually forms its upper tail early on the open. this idea will result in common reversal patterns (Wedges, PW, DB, DTs, etc) in the first 2 hours that create swing setups for traders. (Course Chapters - Trading The Open)
But like always the market needs liquidity to start a Swing/Trend, without liquidity there will be no swing! In other words, the market needs trapped traders, where are those trapped traders?
FBO above prior old highs and below the prior old lows, that is the fuel.
If there are FBO levels on the left that will increase the potential for the creation of these swings and if there are not, the market will develop a TR instead and will create the inner or internal liquidity within its range to be able to trap enough traders therefore to create a BO and swing.
DBTC and DSTC in the charts below refer to Disappointed Buy the close and STC, which is the last Close in a bull trend is a magnet. these levels are my secondary magnets. It's a bull bar close on its high where the market immediately sold without letting them get out.
Let's have a look at these charts from yesterday!
US500 CFD - Hourly chart: note that we don't watch the hourly chart while trading the 5 or 1m chart, but we use it to define the Levels and read the overall price story in terms of where we are now and what happened days before. As Dr. Brooks pointed some traders use HTF SRs to base their LTF trades.
and here it is the Dow Jones! pretty much the same. Look at the DSTC level.
Dow Jones | 1May FOMC Day | Recap
Ok, let's have a late recap of what happened on FOMC last week.
FBO of Equal Highs (EQH) can be part of your reasoning for taking a swing trade.
Here on Dow, we had Equal Highs from yesterday which was RTH HoY too, and the price approached it by consecutive sharp buy climaxes then from a small TR to create a full major reversal.
As we've learned there should be at least a small TR before any reversal. why is it so?! A serious man would not accept that! One must think, observe, and find out!
There are almost always some kinds of FBOs within a TR context that will create the fuel and liquidity for the main BO.
after Dow had taken out the HoY, has formed a small 5M TR then reversed completely. for Dow to have a big size swing down as it did here, the HoY LQ was needed which is a considerable level. For the FOMC 5m Leg to be reversed (just like any other reversal) the price would need a small FBO inside its leg. In other words LTF trapped traders.
that's why you see final flags, wedges, HH MTRs, and HH DTs they're all creating FBOs therefore trapped traders. The final flag is a full pattern of liquidity!
Enough of personal theories... let's have a look at these charts
5M Chart SR
1M Chart Actions, note that this is not advice to trade on a 1m chart or any necessity to watch the 1m chart, this journal is about a market study, not a trade process or recorded trades.
As Dr. Brooks wrote 15 years ago, after any Stop Run there's still a 50% chance of Bo down or up.
25Tick charts (15sec) Final Flags, Creation of Equal high to induce the Stop Run then BO.
Note the difference between ES and Dow and why ES hasn't run stops.