Trading involves much more than just opening your charts and looking for an entry signal. In fact, a good price trader (don't tell anyone) knows how to build and analyze his charts so well that he may not even need a price action pattern or signal to make a trade entry. Indeed, the underlying market distortion, which is defined by the structure of the market, i.e. H. Trend, horizontal key levels, etc., often give enough clues to identify a potential market entry. It is therefore very, very important to learn to identify and draw these parts of the “puzzle” of technical analysis.
In today's lesson, I'll basically walk you through my daily and weekly chart analysis, which you can see in my market comments. The main pieces of this puzzle are: clean black and white price charts, key levels, trends, price movements, market bias and signals. As a result, these things are my main focus in my analysis and market commentary, as learning how to correctly depict a market is crucial to understanding how to properly deal with price promotions.
Why I use "clean" charts and how to set them up
Clean charts or indicator-free charts are the backbone of my technical analysis and my approach to price promotions. If you still don't know why I prefer clean, bare price charts, read my article on why indicators destroy your trade. Suffice it to say that I am signing a simple, less is more trading philosophy and for some very, very good reasons that I have often written about.
If you're not yet using clean, indicator-free price charts, I have an excellent tutorial on how to set up your charts here that you absolutely need to check. You can also download the Metatrader trading platform we use here.
Here's an easy way to set up your charts properly:
First, right-click on the graph and then select "Properties" from the pop-up menu at the bottom. Once you've done this, the following chart options screen will appear. First set the colors and other options as I have them in this picture:
Next, select "common" and set the options as follows:
This is a basic overview of how you can quickly set up your candlestick charts exactly as mine are. Remember there is a reason why I set it up so easily. because it's simply better at trading and we try to eliminate variables that can confuse us or cause doubts, fear, etc.
How I analyze clean price charts
When I write my market comment for weekly members, I first shrink the weekly chart because I want to get a bird's eye view from top to bottom. This gives me a good idea of what has happened and how this can affect what is currently happening.
Note that I have scaled down the weekly view of the current gold charts in the table below. I've marked the most obvious levels of support and resistance. Note that these levels often "reverse" from support to resistance, or vice versa, when the price moves up or down:
Notice in the diagram below that I zoomed out to get last year's data in the daily charts. This gives me enough time to see how the levels and trends of the previous year and the price trend led us to the current point. You will see what I have drawn in the graphic below. These are the levels that I consider the most relevant, as well as the areas of consolidation and trend price movement. These are the first things I look for when I make my award.
We zoomed a little more in the next table, but you'll find that the same levels exist. We'll examine things a little more closely here.
First, notice the bullish tail bar on the far left of the diagram. This was clearly an important turning point from the bottom up. So we're going to draw a horizontal plane at the bottom of this bar. This level would be relevant again if the price fell back on it. Then the termination price entered a phase of sideways consolidation for almost two months before it disintegrated and got out of it. After the breakout, however, the price slowly fell and then formed a bearish pin header at 1237.00; a resistance level that we previously marked in the table. Well, while this is seen as a "countertrend" pin bar, which I don't normally like, since it was at an important level that we already had on the chart, and it was a clear target below the previous breakout level From 1212.00, smart price dealers might have considered short-term trading aimed at stepping into this level. Note: 1212.00 or really 1215.00 – 1205.00 area was a very strong support zone due to the previous eruption, and I would have tried to return to this area for a long time after the eruption.
In the next chart, we look at how a fluctuating market leaves a level, and then watch those levels pull back to act in accordance with existing dynamics.
Note the areas marked "Watch for Pullbacks". We would have made sure that the price fell back to these levels after breaking above them in order to get long and act in accordance with the clearly developing upward momentum. Ideally, we would get a price action signal at these levels after the price has dropped, but this is not always necessary, as I have already written. Sometimes you just need a level and a trend for an entry, see my T.L.S. Articles for more …
Finally, we looked at the recent price move on the daily gold chart.
From this graph we can see some potential entry signals that have formed after retreats to 1212.00 and 1237. Here, too, we had already marked these levels in our charts and were waiting for an “attack” if the price turned back into them. The price is currently just below the important resistance area near 1305 to 1295.
I always think about analyzing a market from top to bottom. That is, you want to start with the longest time frame, zoom out, and then gradually shorten the time frame and zoom in closer. They do this to get a bird's eye view of the market so that what has been happening lately makes more sense in the longer term context. Imagine doing your weekly and daily market analysis like reading a book. To understand what happens on page 100, you must read and understand pages 1 through 99. It's really no different in retail. You need to create a narrative in your head from the market you are analyzing, and you do this by looking back in time, drawing levels, analyzing price movements, and then ending up keeping pace with the market, adjusting or adding levels every day Messages as needed.
Once you do this on a regular basis, it becomes your routine for trading price promotions and eventually becomes a habit. You'll enjoy it soon, let's face it, it's fun to keep up with the markets (if you're a trading nerd like me anyway). So enjoy it, but also find yourself adjusting to the market and its price movements. This is really a requirement if you want to have the chance to learn how to act professionally.
Please leave a comment below with your thoughts on this lesson …
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