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In the chart you can see a demand zone (broad support level) and a supply zone (broad area of resistance). What we want to find at the price zones where supply overwhelms demand and where demand overwhelms supply. The former is known as SUPPLY ZONES. When the market bumps into SUPPLY ZONES, the price will drop. Then, you can make money by shorting the market. The latter is market DEMAND ZONE. With the support of demand, the price will rise. Then, you can profit in a long position. IF the supply zone is broken it becomes a demand zone, pullback test from demand zone you can go long.

Aggressive Initiation Activity Aggressive activity is basically a significant price movement. It is caused by aggressive buyers(SM) pushing the price higher or by aggressive sellers(SM) who are pushing the price lower. This sort of aggressive buying or selling often takes place after sideways price action activity. What happens is that Smart Money is building up their positions (in sideways areas), and when they are done with that, they start aggressive buying or selling to manipulate and to move the price in any direction they want. This is how they make money. They build up their positions slowly and unnoticed, and then they start a trend to make those positions profitable. When the price is moving in a fast trend, there isn’t much time to place any more big positions. For this reason, Smart Money needs to accumulate their positions before the move. this is an example of sideways price action areas followed by aggressive initiation activity.

trading is all about exploiting high probabilities. When big reversal signals form at big structure levels, you’ve got yourself a high probability trading opportunity. When trading from ranging structures, the most profitable signals will form at the range structure boundaries. The chartist a very nicely structured ranging market, very clean bounces from top to bottom. Some very nice price action reversal signals did form at the range boundaries that kicked off strong reversals.

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Market structure levels are where the most powerful reversal trades can form. If you’re going counter trend, one of your quality control checks should be – ‘Is price bouncing off of a major structure level?’

Linear levels can be used to highlight a consolidation pattern that I call a price squeeze. It is a scenario where you get lower highs, and higher lows converge in on one another… creating a ‘squeeze’ scenario. Notice how the higher lows and lower highs created two linear support and resistance levels that converge in on one another.

Another key reason technical analysis works so well on the daily chart is because of the larger amount of data it provides to traders. The noise generated, and erratic price movements on the lower time frames will corrupt your technical analysis, hinder your ability to ‘read the chart’, and usher you into many false signals. Thanks to the clarity the daily chart brings to your screen, good trading opportunities are very easy to identify. The real struggle for you, the trader, is to shift your focus towards less intense trading. Large gains that are up for grabs on the daily time frame can work to change a struggling intra-day scalper into a calm swing trader. The examples of the price action signals are good examples of how easy it can be to anticipate future price movements using simple technical trading signals.

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Have a look at the example trade setup shown – a bearish rejection candle captured on the daily time frame… This is a good example of why we need to be patient, and let the market do what it needs to do. Closing before the end of the day would have ensured you were left standing behind, regretting a lost opportunity. I know it would be great if you could enter a trade and price proceeds to shoot off like a cannon ball hitting your target straight away. This will occur sometimes, but you shouldn’t be relying on it happening too often. The reality is, some trades may dip into the negative once or twice before maturing into profit – this dipping in and out could span over a few days. You need to give your trades a chance, and give the market the opportunity to do its thing. Don’t cut yourself short by closing your trades off at the end of the day – you will seldom catch any good moves in the market if you regularly do this.

If you gave into your fears, you would have been filled with regret as the market rallied back up shortly afterwards. This is how traders get angry with the market. A second retracement occurs, and I must admit it looks nasty – but that’s the nature of USDCAD, and I wanted to show you an extreme example.

Double Bottom The double bottom formation looks like the letter “W” and the pattern is basically the opposite of the double top pattern. This chart pattern is formed after a period of a downtrend, and is formed by two consecutive valleys that are approximately equal to each other, with a peak in between. The price movement of the stock went lower twice, but found support each time. After the second bounce off of the support, the trend reverses and the price heads higher.

Short Trade: 1. Mark out support and resistance levels. 2. Entry: When the price closes below the support level. 3. Stop Loss: At the midpoint of the range. 4. Take Profit: At a ratio of 1:1 For swing trading you need to look for more than 1:1 at least 2:1 .

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Find Rejected Price Levels What are rejected price levels? Well, simply put, these are levels where price made a drastic turn! Rejected price levels are easily spotted with an Hammer or a shooting star candlestick pattern. Watch out for them and pay attention to the levels where price was rejected from.

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This pattern can be seen at the end of a downtrend or a prolonged pullback in an uptrend, and it has a bullish reversal implication. For most traders using this pattern, the signal to go long occurs when the price breaks above the resistance level, but it may be possible to enter a long position earlier when the price gets rejected for the third time at the bottom level, especially if there’s a bullish reversal candlestick pattern there. For the profit target, project the size of the pattern upwards from the neckline. The stop loss order can be placed below the support level or in the middle of the pattern, depending on your entry point and risk tolerance. The EURAUD chart shows a triple bottom pattern. Take note of the entry point, stop loss, and profit target.

The head and shoulder pattern consists of three price swing highs and two intervening price swing lows. Whichever way you want to enter the market, you can estimate the profit target by measuring the height of the head from the neckline and projecting it downwards from the neckline. The stop loss can be kept above the right shoulder for a breakout entry or above the head for entry at the right shoulder. Take a look at the EURAUD chart below. With the bearish pin bar at the right shoulder, one can go short at that level and put a stop loss above the head. For a neckline breakout entry, the stop loss can be above the right shoulder. The profit target is always estimated from the height of the head. @learn_candlesticks_pattern

These are the steps you can follow when trading pullback reversals with RSI signals in a downtrend : -Use a trend line or a long-period moving average to confirm there’s a downtrend -Allow the pullback to reach the trend line, moving average, a Fibonacci retracement level, or resistance level — a confluence is better -Look for an RSI overbought signal or a bearish divergence — combining with candlestick pattern is great -Put a sell order and place your stop loss some pips above the swing high -Ride the downtrend with a trailing stop or place a profit target at the next support level or Fibonacci expansion level.