2 Powerful Price Patterns Simple Truth About Trends - Trading … · 2020. 12. 29. · Identifying...

2 Powerful Price Patterns&

Simple Truth About Trends

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Price Action Analysis

Interpreting the OPEN, HIGH, LOW, & CLOSE on a Price Bar or Candlestick & comparing it to the Prior Price Bar or Candlestick provides insight into what the Market may likely do next.

BAR CHARTS (Price Bars) or CANDLESTICKS

RANGE: Confirms Momentum…………………….

CLOSE: Confirms Price Action

Price Action Analysis helps a Trader…Identify insight into what the Market is likely going to do next.

RANGE

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BULLISH Outside Vertical Bar (BUOVB) / BULLISH Engulfing Pattern

HIGH & LOW must exceed Prior Bar’s HIGH & LOW; CLOSE in Top Quarter of Bar

USED at logical SUPPORT in an established UPTREND

BUOVB (BULLISH OVB)

ISL

BUY ENTRY

PROFIT OBJECTIVE(1X Range of BUOVB)

BULLISH ENGULFING

ISL

BUY ENTRY

PROFIT OBJECTIVE(1X Range of Engulfing Candle)

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Inside Vertical Bar (IVB) at SUPPORT / BULLISH Harami

HIGH & LOW both INSIDE Prior Bar’s Range

Does NOT MATTER where the Bar Closes

USED at logical SUPPORT in an established UPTREND

ISL

BUY ENTRY

PROFIT OBJECTIVE(2X Range of IVB)

IVB (Inside Vertical Bar)

ISL

BUY ENTRY

PROFIT OBJECTIVE(2X Range of IVB)

BULLISH HARAMI

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BEARISH Outside Vertical Bar (BEOVB) / BEARISH Engulfing Pattern

LOW & HIGH must exceed Prior Bar’s LOW & HIGH; CLOSE in Bottom Quarter of Bar

USED at logical RESISTANCE in an established DOWNTREND

ISL

SELL ENTRY

PROFIT OBJECTIVE(1X Range of BEOVB)

BEOVB (BEARISH OVB)

ISL

SELL ENTRY

PROFIT OBJECTIVE(1X Range of Engulfing Candle)

BEARISH ENGULFING

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Inside Vertical Bar (IVB) at RESISTANCE / BEARISH Harami

LOW & HIGH both INSIDE Prior Bar’s Range

Does NOT MATTER where the Bar Closes

USED at logical RESISTANCE in an established DOWNTREND

ISL

SELL ENTRY

PROFIT OBJECTIVE(2X Range of IVB)

IVB (Inside Vertical Bar) BEARISH HARAMI

ISL

SELL ENTRY

PROFIT OBJECTIVE(2X Range of IVB)

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The Simple Truth About Trends

Only 3 Primary Waves (or Trends) in the Markets:

1) UPTREND – Higher Highs & Higher Lows

2) DOWNTREND – Lower Highs & Lower Lows

3) SIDEWAYS Market – Relatively Equal Highs & Equal Lows

Identifying which Wave the Market is in is vital to successful trading. The Simple Truth About Trends is all about pure Price Action! These simple principles form the cornerstone of any consistently successful Trading Methodology.

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UPTREND: Higher Highs (HHs) & Higher Lows (HLs)

LOW

HL

HL

HL

HLHIGH

HH

HH

HH

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DOWNTREND: Lower Lows (LLs) & Lower Highs (LHs)

HIGH

LL

LL

LOWLH

LH

LH

LH

LL

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SIDEWAYS Market: Relatively Equal Highs & Equal Lows

HIGH

LOW

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UPTREND reversing into DOWNTRENDDOWNSIDE Penetration of the most recent Higher Low (HL)

HL(most recent Higher Low)

HL

HH

HH

HL

HH (Lower High)

LH

LL(Lower Low)

UPTREND potentially reversing into a DOWNTREND with DOWNSIDE penetration of most recent HL

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HL(most recent Higher Low)

HH

LL(Lower Low)

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HL(most recent Higher Low)

HH

LL(Lower Low)

(Lower High)

LH

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DOWTREND reversing into UPTRENDUPSIDE Penetration of the most recent Lower High (LH)

(most recent Lower High)

LH

(Higher High)

HH

LL

LH

LH

LL

LLHL

(Higher Low)

DOWNTREND potentially reversing into an UPTREND with UPSIDE penetration of most recent LH

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LH

LL

HH

HL(Higher Low)

(most recent Lower High)

(Higher High)

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(most recent Lower High)

LH

LL

(Higher High)

HH

HL(Higher Low)

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2 Powerful BULLISH Price Patterns@ logical SUPPORT in an established UPTREND

BUOVB (BULLISH OVB) IVB(INSIDE Vertical Bar)

BULLISH ENGULFING BULLISH HARAMI

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2 Powerful BEARISH Price Patterns@ logical RESISTANCE in an established DOWNTREND

BEARISH ENGULFING

BEOVB (BEARISH OVB)

BEARISH HARAMI

IVB(INSIDE Vertical Bar)

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