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Tuesday, June 3, 2014

Forex Trading Strategies The Market Never Forgets 2


Hopefully by now you’re starting to see how the market ‘never forgets’ about key chart levels and event areas. Once you get more experience and familiarity with these levels, your eyes will begin to instantly be drawn to them on a daily price chart, and you’ll start to feel more confident in your ability to analyze and trade with just raw price action and levels.
This next example was a pretty easy one to identify . In November of 2013 we had two pin bars in the NZDUSD carve out an event area up near 0.8410. As price retraced back to this area in mid-January of 2014, we would have already had this key resistance / event area drawn in on our charts and our attention would have been focused on it as price drew closer. Not only would a blind sell entry have worked as price hit that 0.8410 event area, but we also got a nice pin bar sell signal for further confirmation that a move lower was probable.
We can see the market fell all the way down to the key support near 0.8080 after breaking down below that event area pin bar from January 14th. Note, how well price respected that key support and that the market ‘didn’t forget’ about that level either. I’m telling you guys, this stuff is POWERFUL!…


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Let’s take a look at some more examples so the idea crystallizes in your mind…
The daily charts below both show the spot Gold market, one of my favorites to trade. You will notice in the first chart below, a key level / event area formed through about $1277.00. Note the small pin bar on August 7th of 2013, the pin bar and subsequent powerful bullish move from it told us that this $1277.00 level was an event area to keep our eyes on if price re-tested it in the future.
We can see price did re-test it on October 2nd of 2013, and a blind buy entry would have worked well here with a tight stop loss just below $1277.00. However, had you missed that entry or been waiting for a price action signal to ‘confirm’ your entry, a clear fakey buy signal formed on October 15th, just a couple weeks later. This fakey signal at the event area led to a nice push higher.



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 Now, here’s where things get even more interesting…
The chart below is also of Gold, and we are looking at the exact same event area from the chart above, just more recently. This $1277.00 level has been an important level and event area all the way back from that pin bar on August 7th we discussed in the chart above.
Now we are looking at about the most recent 3.5 months of daily chart data in Gold, and we can see this $1277.00 event area is still in-play and working quite well.
Note that since the start of this year price has tested this event area 4 times and each time the level held, at least initially. Most recently we had a fakey buy signal from this event area which formed April 24th . Just today , the market tested this event area at $1277.00 yet again and it held yet again…we will wait to see how this fakey signal from April 24th plays out, but the power and effectiveness of event areas and key chart levels cannot be disputed as you can see by today’s lesson!


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I hope you’ve enjoyed this brief lesson on key levels and event areas. It’s clear upon observing and analyzing the raw price charts of a market that the market truly ‘never forgets’ where major moves started. By learning to spot these key levels and event areas, we can mark them on our charts and when the market starts approaching them on a retrace in the future, we have a high risk/reward scenario setting up to pay close attention to.
I suggest you first learn to trade these second-chance entries at key levels and event areas with a price action signal as a ‘confirmation’ / entry trigger, then as you gain experience you can try the ‘blind’ second-chance entry we discussed here today. For more information and training on key levels,


Success in Forex = Learning + Practicing + Update Knowledge

1 comment:

Anas Ahmed said...

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