Advanced trading lessons - page 8
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when it comes to momentum
momentum produce's traps at key levels.
key levels are not on your time frame they are: two or more time frames above you.
next we will look at the 4 hr same area of the trend but now we are going to plot the monthly
over the four hour. notice the larger reactions are where the: monthly open closes , highs, and lows are.
when momentum has just taken a big blow, we get retest of that blow! then we start with new momentum
.
STARTING WITH NEW MOMENTUM AFTER A LARGE COUNTER TREND MEANS THAT ALL SUPPORT AND RESISTANCE
LEVELS WILL BE IGNORED UNTIL MOMENTUM HAS GONE SOME DISTANCE. THEN LEVELS WILL BECOME INTO PLAY
AGAIN.
So when it comes to price action
Price action is a combination of true support and resistance. By using two time frames above you as trap
support and resistance and against the momentum; now you have an idea what to expect and when.
Now by going three time frames above you, now you have an idea : That's where the larger counter trends
lay.
And even more impotent, when momentum just rejoins the trend after a large reaction the support and resistance
close by means nothing!! Until maybe later!! But for the current new momentum it means very little.
So you can not read a pin bar or spinning top with just the time frame you are on. You have to know
what it was a reaction off of.
How many traders knew?
How many traders knew in this next shot a weekly spinning top would lead to a major counter trend.
I knew when this closed. The trade was long. Why because in this shot i drew the yearly candle!!
The spinning top was the reaction to the yearly open.
How many know that we most likely go back and test this level's break out level early next year?[attach=config]131264[/attach]
So it is like this!!
If you go a good distance and strike a larger time frame level, then expect momentum to pierce
that level then turn around for good size counter trend. The next time you reach that level
expect the counter trend to be smaller at the level then go threw it!
If you started new with momentum after a large counter trend the levels near by will mean little
to nothing but mat come into play later on.
So when you see!
So when you see a time frame close with a doji bar of any kind. You have to know what did the market
react to. Is the market just recently joined momentum ? Are the doji bars temporary traps? Or are they
an actual rejection of some price level?
You have to take risks if you want to trade! Why not take risks on what the market really likes to do?
Why feel at the mercy of not having any real clue of why you think the market will keep momentum?
Make your plan to trade your analysis. Your analysis is your plan to trade.
Why focus on things that put you at risk? Put your head on strait! Get good at doing so! Focus on what
is really important to trade! You know trading home work takes a lot of time! No one needs to be focused
on something that is just a waist of time. Focusing on something that is true only 20 to 30% of the time.
I know that traders will not walk away from here, grasping every thing i have shown them, but they
should grasp enough to help them improve a lot.
All doji bars are the same, but reading them in context is smarter,.
Doji bars against the momentum fail constantly, until the move matures and hits something important.
Next we will look at the : High , one,two, and three.
And the hl. Hh .hl. Hh. Ll. Trap
We are going to look into traps a lot of traps
We are going to look into what i call the enticement signal.
But not tonight , tonight going to my sisters. Ha who?
Price action traps
Sub not earlier we talked about horizontal support and resistance
we will go back and finnish that subject in more
depth later!!
This what a traders should look for in a counter trend: This does not happen all the time! But is very common!
The lower low traps with trend traders (stopping them out), and then draws in traders in the wrong direction,
with an against the trend signal , then breaks the signal slightly with a (high -1) then resting inside.
The resting inside gives traders "time to get smart" they place long trades above the inside resting at the
(high-2).
Shorts are gone and the longs are in. Then the market drives short.
To take this shot of this trap. I did not try and find an example. All i did was turn on the chart and it was right in front of me.
This that common.
[attach=config]131282[/attach]
There is more to this shot.
This shot was on the daily.
I said that the rest inside gave the long traders a chance to place trades above the high.
But looking at the daily chart you see know rest inside, lower your freq. And look on the one hour
time frame. In this next shot i will point out the rest inside!!
As soon as the market broke the high then pulled back, the really crafty trader places his trade above that high.
Some entered with the open of the new day.
This is the low one, high two trap!!!!![attach=config]131283[/attach]
the thing is i knew this so well that i knew this is what i would see when lowering to the one hour. You will now
see what i do.
This next shot
This next shot guess what i am still on the same screen. This is high one trap.
The difference here between the high one and high two trap is: The rest inside
was on the same frequency the daily.
Hears a high one trap!![attach=config]131284[/attach]
Ok same chart next counter trend
Another high one trap.[attach=config]131285[/attach] and again lowering the freq. To the one hour with the next shot.
So we can look inside. Notice the deep resting opportunity.[attach=config]131286[/attach]