October 5, 2011
- in Uncategorized by schooloftrade
Price Structures gives me the clues I need to find the Best Trades
Price Structure:
The way the candlesticks line up to give us clues for what the market personality will look like ahead of time.
Using trend lines, I draw price channels, sideways range, and price wedges. These are the most common ‘structure’ with trend lines.
I also use the PHOD and PLOD to find the Inside or Outside Day, that is most common using your trading ranges.
Step 1 = use your trend line tools and trading ranges to find your ‘price structures’
Step 2 = use those structures to anticipate what it most likely to happen with them
Step 3 = visualize price rising, and then price falling.
(we do this every morning in our live trade room, and its covered in our Advanced Course)
Example:
Today on Crude oil futures we have a bear price channel:
Price structure says ‘bear channel’ and that means the following:
– Higher percentage trades will be short
– Sell new lower lows with retracements
– Beware selling at the lows of the bear channel
– Sell the highs (resistance) of the bear channel
– Sell the highs (resistance) above the bear channel highs
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What do the LONG Candlestick Wicks mean to us?
– Pressure, in one direction or the other
– Price will most often move in the OPPOSITE direction of the wicks
– Think ‘failure pattern’ when I see big wicks
– If you see big wicks above AND below the current price we have to be careful. Wicks in one direction are ok, but when we have wicks in both directions we need to treat this as a market without any direction or confidence in direction.
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Does a 2step pattern always go towards the trigger lines?
YES! Why, because it is a trend reversal pattern.
