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Bitcoin Buy for whatever reason on 4H chart
Small position, to maybe scale in more should price retest Bottom of the BO.
Nice set up, where did you get in, close of the last bar?
I did not get it. I'm mainly trading another cryptocurrency: Binance Coin (BNB). But this setup of BTC (bitcoin), to me, looked so "textbook", that I wanted to share it on the forum.
I watch te BTC-chart while trading BNB (Binance Coin). Higher time frames have similar shapes/structures, as can be seen in both attached charts.
I trade BNB, instead of BTC, because it has higer volatility, which is necessary to reduce the extent to which commission has influence on the net result.
While BTC was showing a lot of buying pressure, BNB was showing buying pressure, but to a lesser extent. I went long BNB.
This is the actual trade I took. DB after very big bear bar, late in Bear trend. Buildup of buying pressure. First target is closing of the Gap, that was created by that late big bear bar.
So Long BNBUSDT
My interpretation of the chart at that entry point is that it was potentially a second leg trap in a trading range. There's still a large gap between the prior breakout point and where the market was trading at the entry point. So while those bear bars that you referred to may have been a climax, that doesn't have to lead to a reversal (climax means the market went too far too fast but doesn't necessarily mean it's the end of the move, Dr. Brooks talks about this on page 62 of his first book on Trends). There are a number of green bodies, but only one is a strong trend bar closing near its high, the rest all have prominent tails and are more likely trading range bars so there may not be that much buying pressure. There is also a considerable degree of overlap between most of the bars, including the strong bull trend bar relative to the bars that came before it. The pullback is mostly horizontal because the market is potentially stabilizing at those lower prices, not necessarily because it's trying to reverse back up (remember the market is a price discovery mechanism and seeks to facilitate trade, the market moved to a lower range of prices and was happy to trade back and forth). The bear bar that came two bars after the entry was a breakout test and failed, likely because there were still sellers above so getting out a tick below that bar would have probably been a good idea.
This was also the first time several bars have closed above the 20 EMA in a few days and they were small and unimpressive relative to the bear bars that came before so that's another reason to be suspicious of whether the market is actually trying to reverse (if there were strong buyers present and those were actually discount prices, they'd be jumping at those prices which would likely drive the market up since there can't simultaneously be strong sellers seeing those same prices as a premium providing substantial liquidity, so it may be going up in search of more sellers rather than because the price is too low). It could potentially draw in more buying if it progressed up, but the follow through was too sideways at that time in my opinion. It was also an entry right below the 220 EMA. It is true that the longer the range lasts the more 50/50 the market becomes in terms of the direction it will ultimately breakout, but I don't think the follow through was good enough to stay in the trade in this case.
Thanks for your input! I was also keeping the possibility of a 2nd leg trap in mind.
It was almost certainly one of those situations where, in case managed correctly, money could be made trading in both directions.
Al also discusses, in one of his videos, that by detecting the buildup of buying pressure, a BO can be anticipated early. To me, the micro gaps that were made by the consecutive bull bars, within the trading range, stood out.
It's always going to be subtle.
We've had a Gap bar, which was also a BO-bar, out of the TR. Price is now at level where exhaustion gap is closed, so watching how price reacts here. Next target would be MM, based on the TR: 22.5 - 25.0 - 27.5 (blue lines).
Current Bull channel looks tight.
Thanks Marvin, good point! I didn’t notice the micro gaps before. Also I overlooked the tightness of the two bull legs up and was more focused on the relative strength of the move down (and I didn’t realize how far it was outside of the bear trend line either). The poor follow through on the low 2 made the upward move more likely as well so if the trade was exited before that would have potentially been a reasonable re-entry point. Order flow information can be useful as well to see the nature of the interaction, if the instrument is traded on a centralized exchange.
Fairly clear wedge followed by HL/MTR. You were patient to wait for reversal to clear the MA and put your stop in the most reasonable place. Don't see anything wrong with this trade. May have been a bit late in hindsight but as long as you went for 2x risk, this is reasonable. A few things could go against you...like first push above MA...but there are no perfect setups.
Good points, Mark! Just to be clear, I wasn’t saying it was a wrong trade, just some things that I saw that would have made me reluctant to take it at that particular entry point. But yes, there are no perfect trades and after the low 2 failed I would’ve personally felt more comfortable taking it. I do agree that it has a reasonable trader’s equation with a 2x target even at that entry though.
I was stopped out in the purple circle. The stop was probably too high, but I installed it before going to sleep, and didn't want the market to move too much against me, and lose all of the profit.
It's making another Bull Leg right now, but I suspect this Leg could be last Leg. Last TR = Final Flag. The whole Bull swing is a PB of the bigger Bear Swing that took place from september 14th to september 22nd. And we're at about 50% PB now. What do you guys and gals think?