A simple price action approach

[dv4632]

Here's one from today. Just watching the 5-min alone.

Price closed back inside the up channel on the big green bar. I waited for it to retrace and paper traded long as noted by the green arrow. Stopped out on the red arrow.

The mistake I made was that euro had already traveled its average daily range for the day, so maybe longs had a higher risk of failing.

 

[nakachalet]

Quote from dv4632:

Here's one from today. Just watching the 5-min alone.

Price closed back inside the up channel on the big green bar. I waited for it to retrace and paper traded long as noted by the green arrow. Stopped out on the red arrow.

The mistake I made was that euro had already traveled its average daily range for the day, so maybe longs had a higher risk of failing.

just another curious inquisition:

according to your chart, at about 10:00

at that point in time and space.... without the after the fact candles or others....

how would you be able to determine that.... that euro had already traveled its average daily range for the day....

there was plenty of room for the price to travel even higher.... was there not, pls? in your position and with your chart, many others probably would guess the same and would likewise be stopouted as well.

warm regards and thx for the posting for easy followup....

 

[NoDoji]

Quote from dv4632:

Here's one from today. Just watching the 5-min alone.

The mistake I made was that euro had already traveled its average daily range for the day, so maybe longs had a higher risk of failing.

The only "mistakes" I see would be going long without confirmation (price breaking a previous bar's high to take you into the trade), and placing a stop in no-man's land (it should've been below the previous support level since you didn't wait for confirmation to go long where you did). That's the advantage of price confirmation on a trade: you pay a little more for the entry, but the probability of success without getting stopped out is higher.

Notice how waiting for a previous bar's high to break made for a much better long entry.

Quote from nakachalet:

how would you be able to determine that.... that euro had already traveled its average daily range for the day....

I believe an average daily range is something that would be easily calculated for a given time period such as the past week, the past month, the past quarter, etc.

Of course price can keep going, but the previous two breakouts were very weak, so long positions might be taken more cautiously than earlier when the trend was in full swing.

That's my opinion

 

[macattack]

Quote from NoDoji:

The only "mistakes" I see would be going long without confirmation (price breaking a previous bar's high to take you into the trade), and placing a stop in no-man's land (it should've been below the previous support level since you didn't wait for confirmation to go long where you did). That's the advantage of price confirmation on a trade: you pay a little more for the entry, but the probability of success without getting stopped out is higher.

Notice how waiting for a previous bar's high to break made for a much better long entry.

He was probably looking at that giant green bar as "going long with confirmation" as it definitely took out the previous high. Any buy after that bar would still be valid as long as the low of the green bar wasn't taken out; by waiting he just gets a better fill.

I think the weakness in taking that particular bar was that price was in chop mode. Somebody somewhere said that the first move is for rookies, and the 2nd move is for the pros. So the big obvious green bar breaking out of the chop has a high risk of getting you in too early. I'm sure everyone noticed that bar, and then a lot of them probably put a stop at it's low & got stopped out.

When in chop like that sometimes it's better to wait for price to break out of it, and then also wait for a retracement or consolidation, and then a continuation up. Make price prove itself, especially when in a choppy area.

 

[Xspurt]

Quote from dv4632:

Here's one from today. Just watching the 5-min alone.

Price closed back inside the up channel on the big green bar. I waited for it to retrace and paper traded long as noted by the green arrow. Stopped out on the red arrow.

The mistake I made was that euro had already traveled its average daily range for the day, so maybe longs had a higher risk of failing.

Good observation about the daily range as a red flag to dig deeper.

There are another 3 mistakes...

1. Your ma is warning of a loss of momentum. That tells you to pay careful attention to the flattening action left of current PA
2. If you had picked up on this and done a better investigation of this red flag you would have seen the channel
3. You bought a PA sell signal on the top of the channel and sold the support. Brush up on your PA signals so they compliment your channels

You are doing a great job and as you progress you will refine your technique. It takes time to turn a technique into a methodology.

 

[JoshDance]

Quote from Xspurt:


3. You bought a PA sell signal on the top of the channel and sold the support. Brush up on your PA signals so they compliment your channels

Xspurt, I had just drawn the same channel and uploaded it so I might as well post my chart as well. That was my observation--that the channel drawn on the chart was never really respected, thus not a very "good" channel.

The channel you drew and that I show in the chart here as well was made by connecting the first two high points, and the parallel line was placed at the first low. So the channel was complete well before what is shown here, and in experimenting the last few days with these, they have been quite interesting to watch and trade from, even on the micro time scale.

 

[JoshDance]

Quote from NoDoji:

I note S/R levels off the 60-min and daily charts. I also note where previous S may become R and R may become S in a pullback.

I find that focusing on the 5-min and 1-min chart together and talking to myself about what's happening keeps me alert and on the correct side of the price action. I have the 60-min chart in view, but I only look at it following a strong price swing to see what the bigger picture looks like.

I found the DOM to be a distraction because when I saw price move a certain number of ticks I was inclined to move my stop to b/e instead of focusing on the chart and determining if there was any valid reason to move my stop. I now force myself to focus on the charts until a bar closes, at which point I can make a decision about whether to move a stop or target, leave them alone or prepare to stop-and-reverse.

Cool, thanks for your help! Waiting for a bar close is probably a great step I can take in trying to stop my habit of moving stops early.

 

[dv4632]

Thanks for the advice NoDoji. Maccattack was correct in his interpretation. I considered the big green bar to be the confirmation. But I thought I could get a better entry by waiting for a retrace, so entered as price was backtesting the lower channel line.

When you say waiting for a previous bar's high to break, do you mean on a 5-min bar close or any intrabar take-out of the previous high?

Xspurt, thanks for pointing out the other channel. I didn't see it at the time. But yes, I obviously did that trade pretty much backwards!

I noticed that price appeared to be flattening out but it never really registered with me. I did notice that at 8am price broke to a new high then quickly made a sharp retreat. I saw that as a potential sign of weakness but chose to ignore it and take the trade anyway.

I guess it's fair to say that the waning momentum was enough reason to consider drawing in a new, less steep channel. And this is where the art part comes in, or maybe it's just experience. Knowing when to decide that one channel/tl might no longer be "in play" and switching to another.

This is fun. I'm seeing channels in my sleep LOL. I'll go over some older charts this weekend, bar by bar, and see how I do. Thanks for the responses everyone!

By the way, awesome intraday triangle pattern on ES today. Too bad I was watching 6E.

 

[baro-san]

Quote from JoshDance:

... The channel you drew and that I show in the chart here as well was made by connecting the first two high points, and the parallel line was placed at the first low. ...

An up trend line should be drawn through the first two bottoms of the up move, then the parallel through the highest top in between those bottoms.

 

[JoshDance]

Quote from baro-san:

An up trend line should be drawn through the first two bottoms of the up move, then the parallel through the highest top in between those bottoms.

Thanks for pointing this out baro-san, and I know this is generally the case. But in this case as you can see in the chart, the structure of the move was such that there were not two easily identifiable lows to connect. This does not look like a classic "up trend" where this can be done, so I connected the only two good points available, and then paralleled the line to the bottom. As you can see, this proved to be a well-formed channel while it lasted.