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TRY TO LOOK FOR PATTERNS ON ALL AXIS (X,Y,Z)
A) Currency Movements
 Base currency is what you are buying and selling.
1) GDP: ecomomic growth rate
-Stronger GDP = Stronger Currency
2) SUPPLY & DEMAND
-More demand/ More value
3) INTEREST RATE
-High IR/ Higher demand
4) NEWS
-Central banks communicate future policy intentions to guide market expectations
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B) Market Structure
UPTREND
-Market makes HIGHER HIGHS AND HIGHER LOWS.
-HIGHER LOWS are made when market PULLS back from trend to structure (trendline/support/resistance/previous high level)
-HIGHER HIGHS are made when market retraces from structure in the direction of trend.
DOWNTREND
-Market makes LOWER HIGHS AND LOWER LOWS.
-LOWER HIGHS are made when market PULLS back from trend to structure (trendline/support/resistance/previous high level)
-LOWER LOWS are made when market retraces from structure in the direction of trend.
TREND REVERSAL
UPTREND TO DOWNTREND
-
The first LOWER LOW signals trend reversal.
If market breaks that LOWER LOW, it confirms the trend reversal.
(The opposite is true)
CONSOLIDATION
-
There is no trend taking place.
Don’t trade a consolidation
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TRENDLINE
-
Connects LOWS AND HIGHER LOWS on a trend.
It can act as SUPPORT & RESISTANCE.
If market breaks Trendline, in theory market is setting up a SELL SIGNAL.
SOMETIMES you can draw one trendline and copy it onto other HIGHS & LOWS.
SUPPORT
-
Support is a price level at which a currency pair or any financial instrument tends to stop
falling/reacts and may even bounce back upward. It's like a floor that prevents the price from
declining further.
RESISTANCE
-
Resistance is a price level at which a currency pair or any financial instrument tends to stop
rising/REACTS and may experience a reversal or consolidation. It acts as a ceiling preventing the
price from moving higher.
Trade the “Bounce”
-Buy when the price falls towards support.
-Sell when the price rises towards resistance.
Trade the “Break”
-Buy when the price breaks up through resistance.
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-Sell when the price breaks down through support.
- When the price passes through resistance, that resistance could potentially become support.
- The more often price tests a level of resistance or support without breaking it, the stronger the area of
resistance or support is.
- When a support or resistance level breaks, the strength of the follow-through move depends on how
strongly the broken support or resistance had been holding.
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C) PRICE ACTION
1) action
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

When the price passes through resistance, that resistance could potentially become support.
Trending markets have higher odds of CONTINUING the trend than of REVERSING the trend.
(if things go well for a country/currency/stock, it’s more likely to keep going good, there by if
trend is initiated, it’s more likely to stay that way).
Trends end in a climax, be it - An Emotional Price Spike (a price that gives anxiety to market
traders, leading to impulsive BUYING/SELLING).
-Volume Spike (buyers may come in after a specific price and sellers
may be collecting profits thereby volatility increases as well, as the market gets higher, sellers
will be waiting for a spike so as to come and push the market down buy selling for profit,
balancing supply/demand in the process)
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2) behavior
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Trends persist because when things go well for a company, it tends to carry on going well for a
company.
E.g for a DOWNTREND, when market breaks a consolidation/ranging market,
-Traders jump on board to sell.
-Those who were short have to wait and close their positions @ lower & lower prices.
A new trend is born
Trends persist for a currency pair because when things go poorly for one country, it tends to
continue to go poorly for that country.
“FADE” the short term trend, in favor of the long term trend.
*if DAILY chart is on an UPTREND, and HOURLY chart is on a DOWNTREND, then consider going
against the HOURLY chart In favor of the DAILY chart. (look for entries on pull-backs)
STRONG trend = LONG TERM TREND (higher timeframe)
WEAK trend = SHORT TERM TREND (lower timeframe)
Everytime the market has rallied for a while,
-sellers come into the market,
-and they push the market back down again.
#simply follow the market in it’s current direction.
#and trade in that direction.
#you should not try to pick a point where the trend is ending.
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3) Trend

Once a trend is established,
It is better to bet it will continue,
Than it will reverse.

A big trend rarely stops without major warning signs such as;
-Volume spikes: (sudden and significant increase in trading volume – emergence of a new trend)
-Price Spikes: (Rapid & Temporary increase or decrease in value)
-Emotional Market: (Participants react impulsively to news, rumors or price movements)

The largest price move comes towards the end of a trend.
(90% of the move comes in the last 10% of the trend)

Market moves from a TRENDING market to a RANGE BOUND market (consolidation)
4) End of Trend

The market reaches a price level which has significance to investors (i.e previous HIGH/ previous
LOW)
-They take advantage of the price possibly against the trend.
1. VOLUME SPIKES- Increased volume @ a price level is often indicative of an imminent
change in trend.
2. EMOTIONAL HIGH/LOW- A trend will continue until it reaches a price level associated
with an emotional response by the market.
3. If market moves against the LONG TERM TREND, it’s our job to identify an entry point.
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D) CHART PATTERNS
-USE FIBONACCI SEQUENCE TO ASSESS TREND LENGTH.
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Trading False Breakouts Using Protective Stops
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E) CANDLE-CHARTS:
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1)Standard
o Trend continuation.
o You can expect market to continue higher or lower depending
on the color of the candle.
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2)Spinning top
o The Spinning Top is sign of trend weakness.
o Might indicate potential pausing/consolidation/reversal in
trend. (if market has been trending)
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o It’s a line of ranging or reversal (bulls and bears meet).
o Traders are taking profits.
NOTE
-did the market digest bad news.
-did the market hit an old top.
>TYPES OF DOJI PATTERN
o Acts as a warning sign.
o If I’m open LONG, then consider moving the stop loss up,
Just underneath the low of the LONG-LEGGED-DOJI.
o Or simply take profits, if I’ve been long in the market already.
o Or await more data.
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GRAVESTONE DOJI
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DOJI STAR
o Suggests higher prices
o Works with the pattern of 3.
o Strong reversal sign.
o Or continuation if a similar candle formation like this is not formed.
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o Lower shadow should be 2 to 3 times the length of the body.
o The umbrella is widely regarded as a reversal line but confirmation of
reversal is required.
o The colour of the real-body is usually not considered to be important.
o But I would recommend that you do pay attention to the direction of the
closing as this gives additional weight to the pattern.
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o Indicates pressure on the current direction.
o A strong signal for trend continuation.
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o Can be a positive reversal signal in an uptrend.
o But only on a new high
o Indicates strong area of support.
o Confirmation is sought prior to entering any new LONG positions.
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o Current bar engulfing previous bar.
o They work great as a reversal signal or continuation signal.
o The signal should be in the direction of the current candle, which is the
engulfing candle.
o Create hammer with previous open and current close.
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>Engulfing Patterns for Day-Trading
o Works perfectly on a 10min timeframe or higher.
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o You can trace your trade using the 3-bar rule.
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F) TRADING INDICATORS
1. THE RSI (trend reversal) (entry/exit).
 RSI or Stochastic RSI, shows momentum and gain of momentum.
 70 = (overbought)
 30 = (oversold)
DIVERGENCE.
-
When we have a new high on price,
But we don’t get a new high on the momentum oscillator.
(THE OPPOSITE IS TRUE)
Eg. In this downtrend, the RSI increases from 19 on 1, to 21 on 2, meaning the downwards
momentum that the price action is showing is no longer valid.
>For entries, watch for a solid price rejection.
>At that point, you can put an order and stop-loss below the wick of the low.
>but as a beginner, set your RISK to REWARD ratio @ 1:2 in terms of TARGET & STOP LOSS.
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2. AVARAGE TRUE RANGE (atr):
-RANGE
>RANGE = HIGH – LOW
-AVARAGE TRUE RANGE

The higher the value of the indicator, the higher the probability of a trend change.

The lower the indicator’s value, the weaker the trend’s movement is.
>AVARAGE RANGE OVER A 14 PERIOD LOOK-BACK.
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>RISING ATR = INCREASING VOLATILITY (FLUCTUATIONS)
>FALLING ATR = LOW VOLATILITY (LESS-FLUCTUATIONS / CONSOLIDATION)
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-STOP-LOSS & TAKE PROFIT WITH (ATR)
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-SIGNALS WITH (ATR)
-
NOTE: Market moves from low to High volatility. (ATR, consolidation)
ATR shows when momentum comes into the market,
#Candle with 1 or 1.5 times the value of ATR.
-
NOTE: If weekly ATR value is at a multi-year low, something is about to happen.
(EXPLOSIVE BREAK-OUT).
-
NOTE: If market moves 1.5 to 2 times the value of the ATR, market tends to snap back
in the opposite direction. (REVERSAL or BREAKOUT)
-
NOTE: Stop loss = 1.5 + the entry value

(100 PIP ATR MEANS, EVERY CANDLE HAS BEEN MOVING AN AVARAGE OF 100 PIPS
BEFORE IT CLOSED, FOR THE PAST 14 PERIOD {TIMEFRAME})- [STOP LOSS SHOULD BE
WIDER TO ACCOMMODATE MOVEMENT]
(20 PIP ATR MEANS, EVERY CANDLE HAS BEEN MOVING AN AVARAGE OF 20 PIPS
BEFORE IT CLOSED, FOR THE PAST 14 PERIOD {TIMEFRAME})-[SHRINK OUR STOP LOSS
TO INCREASE RISK/REWARD RATIO]

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3 Fibonacci retracement
 Fibonacci retracement levels are horizontal lines that indicate
the possible support and resistance levels where price could
potentially reverse direction.
 The first thing you should know about the Fibonacci tool is that it
works best when the market is trending.
 The idea is to go long (or buy) on a retracement at a Fibonacci
support level when the market is trending UP.
 And to go short (or sell) on a retracement at a Fibonacci
resistance level when the market is trending DOWN.
 The theory is that after price begins a new trend direction,
the price will retrace or return partway back to a previous
price level before resuming in the direction of its trend.
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Finding Fibonacci Retracement Levels
 In order to find these Fibonacci retracement levels, you have to
find the recent significant Swing Highs and Swings Lows.
 Then, for downtrends, click on the Swing High and drag the
cursor to the most recent Swing Low.
 For uptrends, do the opposite. Click on the Swing Low and drag
the cursor to the most recent Swing High.
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Uptrend
Here we plotted the Fibonacci retracement levels by clicking on the Swing Low at .6955 on April
20 and dragging the cursor to the Swing High at .8264 on June 3.
Tada! The charting software automagically calculates and shows you the retracement levels.
As you can see from the chart, the Fibonacci retracement levels were .7955 (23.6%), .7764
(38.2%), .7609 (50.0%*), .7454 (61.8%), and .7263 (76.4%).
Now, the expectation is that if AUD/USD retraces from the recent high, it will find support at one
of those Fibonacci retracement levels because traders will be placing buy orders at these levels
as the price pulls back.
*The 50.0% ratio is not officially a Fibonacci ratio, but it was able to sneak into the group and
has never left.
Now, let’s look at what happened after the Swing High occurred.
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Price pulled back right through the 23.6% level and continued to shoot down over
the next couple of weeks.
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It even tested the 38.2% level but was unable to close below it.Later on, around
July 14, the market resumed its upward move
eventually broke
through the swing high.

Clearly, buying at the 38.2% Fibonacci level would have been a profitable longterm trade!
#One thing you should take note of is that price won’t always bounce from these levels.
They should be looked at as areas of interest,
#For now, there’s something you should always remember about using the Fibonacci
tool and it’s that they are not always simple to use!
If they were that simple, traders would always place their orders at Fibonacci
retracement levels and the markets would trend forever.
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How to Use Fibonacci Retracement
with Support and Resistance


One of the best ways to use the Fibonacci retracement tool is to spot potential
support and resistance levels and see if they line up with Fibonacci retracement
levels.
If Fibonacci levels are already support and resistance levels, and you combine
them with other price areas that a lot of other traders are watching, then the
chances of price bouncing from those areas are much higher.

As you can see, it’s been on an uptrend recently. Look at all those green
candles!You decide that you want to get in on this long USD/CHF
bandwagon.But the question is, “When do you enter?”

You bust out the Fibonacci retracement tool, using the low at 1.0132 on January
11 for the Swing Low and the high at 1.0899 on February 19 for the Swing
High.Now your chart looks pretty sweet with all those Fibonacci retracement
levels.
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Now that we have a framework to increase our probability of finding a solid entry, we
can answer the question “Where should you enter?”
You look back a little bit and you see that the 1.0510 price was good resistance level in
the past and it just happens to line up with the 50.0% Fibonacci retracement level.
Now that it’s broken, it could turn into support and be a good place to buy.
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If you did set an order somewhere around the 50.0% Fib level, you’d be a pretty happy
camper!
There would have been some pretty tense moments, especially on the second test of
the support level on April 1.
Price tried to pierce through the support level but failed to close below it. Eventually,
the pair broke past the Swing High and resumed its uptrend.
You can do the same setup on a downtrend as well. The point is you should look for
price levels that seem to have been areas of interest in the past.
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How to Use Fibonacci Retracement
with Trend Lines
Remember that whenever a pair is in a downtrend or uptrend, traders use Fibonacci
retracement levels as a way to get in on the trend.
So why not look for levels where Fib levels line up right smack with the trend?
Here’s a 1-hour chart of AUD/JPY. As you can see, the price has been respecting a
short-term ascending trend line over the past couple of days.
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Here we plotted the Fibonacci retracement levels by using the Swing low at 82.61 and
the Swing High at 83.84.
Notice how the 50.0% and 61.8% Fib levels are intersected by the rising trend line.
Could these levels serve as potential support levels? There’s only one way to find out !
Guess what? The 61.8% Fibonacci retracement level held, as price bounced there
before heading back up. If you had set some orders at that level, you would have had a
perfect entry!
A couple of hours after touching the trend line, price zoomed up like Astro Boy bursting
through the Swing High.
The combination of both a diagonal and a horizontal support or resistance level could
mean that other traders are eying those levels as well.
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Take note though, as with other drawing tools, drawing trend lines can also get pretty
subjective.
You don’t know exactly how other traders are drawing them, but you can count on one
thing – that there’s a trend!
If you see that an uptrend is developing, you should be looking for ways to go long to
give you a better chance of a profitable trade .
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How to Use Fibonacci Retracement
with Japanese Candlesticks
If you can tell when buying or selling pressure is exhausted, it can give you a clue of
when price may continue trending
The pair seems to have been in a downtrend the past week, but the move seems to
have paused for a bit.
Will there be a chance to get in on this downtrend? You know what this means. It’s time
to take the Fibonacci retracement tool and get to work!
As you can see from the chart, we’ve set our Swing High at 1.3364 on March 3, with the
Swing Low at 1.2523 on March 6.
Since it’s a Friday, you decided to just chill out, take an early day off, and decide when
you wanna enter once you see the charts after the weekend.
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Whoa! By the time you popped open your charts, you see that EUR/USD has shot up
quite a bit from its Friday closing price.
While the 50.0% Fib level held for a bit, buyers eventually took the pair higher. You
decide to wait and see whether the 61.8% Fib level holds.
After all, the last candle was pretty bullish! Who knows, the price just might keep
shooting up!
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Well, will you look at that? A long-legged doji has formed right smack on the 61.8%
Fibonacci retracement level.
If you paid attention in Grade 2, you’d know that this is an “exhaustive candle.”
Has buying pressure died down? Is resistance at the Fibonacci retracement level
holding?
It’s possible. Other traders were probably eyeing that Fib level as well.
Is it time to short? You can never know for sure (which is why risk management is so
important), but the probability of a reversal looks pretty darn good!
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If you had shorted right after that doji had formed, you could have made some serious
profits.
Right after the doji, the price stalled for a bit before heading straight down. Take a look
at all those red candles!
It seems that buyers were indeed pretty tired, which allowed sellers to jump back in and
take control.
Eventually, the price went all the way back down to the Swing Low. That was a move of
about 500 pips! That could’ve been your trade of the year!
Looking for “Fib Sticks” can be really useful, as they can signal whether a Fibonacci
retracement level will hold.
If it seems that price is stalling on a Fib level, chances are that other traders may have
put some orders at those levels.
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How to Use Fibonacci Extensions to
Know When to Take Profit
Let’s start with an example of an uptrend.
In an uptrend, the general idea is to take profits on a long trade at a Fibonacci Price
Extension Level.
You determine the Fibonacci extension levels by using three mouse clicks.
First, click on a significant Swing Low, then drag your cursor and click on the most
recent Swing High. Finally, drag your cursor back down and click on any of the
retracement levels.
This will display each of the Price Extension Levels showing both the ratio and
corresponding price levels. Pretty neat, huh?
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The 50.0% Fib level held strongly as support and, after three tests, the pair finally
resumed its uptrend. In the chart above, you can even see the price rise above the
previous Swing High.
Let’s pop on the Fibonacci extension tool to see where would have been a good place
to take off some profits.
Here’s a recap of what happened after the retracement Swing Low occurred:

Price rallied all the way to the 61.8% level, which lined up closely with the
previous Swing High.

It fell back to the 38.2% level, where it found support

Price then rallied and found resistance at the 100% level.
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
A couple of days later, the price rallied yet again before finding resistance at the
161.8% level.
As you can see from the example, the 61.8%, 100%, and 161.8% levels all would have
been good places to take off some profits.
Now, let’s take a look at an example of using Fibonacci extension levels in a downtrend.
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In a downtrend, the general idea is to take profits on a short trade at a Fibonacci
extension level since the market often finds support at these levels.
Let’s take another look at that downtrend on the 1-hour EUR/USD chart we showed you
in the Fib Sticks lesson.
Here, we saw a doji form just under the 61.8% Fib level. Price then reversed as sellers
jumped back in, and brought price all the way back down to the Swing Low.
Let’s put up that Fib Extension tool to see where would have been some good places to
take profits had we shorted at the 61.8% retracement level.
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Here’s what happened after the price reversed from the Fibonacci retracement level:

Price found support at the 38.2% level

The 50.0% level held as initial support, then became an area of interest

The 61.8% level also became an area of interest, before price shot down to test
the previous Swing Low

If you look ahead, you’ll find out that the 100% extension level also acted as
support
We could have taken off profits at the 38.2%, 50.0%, or 61.8% levels. All these levels
acted as support, possibly because other traders were keeping an eye out for these
levels for profit-taking as well.
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How to Use Fibonacci to Place Your
Stop
Method #1: Place Stop Just Past Next
Fib
The first method is to set your stop just past the next Fibonacci level.
If you were planning to enter at the 38.2% Fib level, then you would place your stop
beyond the 50.0% level.
If you felt like the 50.0% level would hold, then you’d put your stop past the 61.8% level
and so on and so forth. Simple, right?
Let’s take another look at that 4-hour EUR/USD chart we showed you back in
the Fibonacci retracement lesson.
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If you had shorted at the 50.0%, you could have placed your stop loss order just past
the 61.8% Fib level.
The reasoning behind this method of setting stops is that you believed that the 50.0%
level would hold as a resistance point. Therefore, if the price were to rise beyond this
point, your trade idea would be invalidated.
The problem with this method of setting stops is that it is entirely dependent on you
having a perfect entry.
Setting a stop just past the next Fibonacci retracement level assumes that you are
really confident that the support or resistance area will hold. And, as we pointed
out earlier, using drawing tools isn’t an exact science.
The market might shoot up, hit your stop, and eventually go in your direction. This is
usually when we’d go to a corner, and start hitting our head on the wall.
We’re just warning you that this might happen, sometimes a few times in a row, so
make sure you limit your losses quickly and let your winners run with the trend.
It might be best if you used this type of stop placement method for short-term, intraday
trades.
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Method #2: Place Stop Past Recent
Swing High/Low
Now, if you want to be a little safer, another way to set your stops would be to place
them past the recent Swing High or Swing Low.
For example, when the price is an uptrend and you’re in a long position, you can place a
stop loss just below the latest Swing Low which acts as a potential support level.
When the price is in a downtrend and you’re in a short position, you can place a stop
loss just above the Swing High which acts as a potential resistance level.
This type of stop loss placement would give your trade more room to breathe and give
you a better chance for the market to move in favor of your trade.
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If the market price were to surpass the Swing High or Swing Low, it may indicate that a
reversal of the trend is already in place.
This means that your trade idea or setup is already invalidated and that you’re too late
to jump in.
Setting larger stop losses would probably be best used for longer-term, swing-type
trades, and you can also incorporate this into a “scaling in” method, which you will learn
later on in this course.
Of course, with a larger stop, you also have to remember to adjust your position size
accordingly.
If you tend to trade the same position size, you may incur large losses, especially if you
enter at one of the earlier Fib levels.
This can also lead to some unfavorable reward-to-risk ratios, as you may have a wide
stop that isn’t proportional to your potential reward.
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4 MOVING AVARAGE (MA)
A moving average is simply a way to smooth out price fluctuations to help you
distinguish between typical market “noise” and the actual trend direction.
By “moving average”, we mean that you are taking the average closing price of a
currency pair for the last ‘X’ number of periods.
moving averages smooth out price action.
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Generally, the smoother the moving average, the slower it is to react to the price
movement.
The choppier the moving average, the quicker it is to react to the price
movement.
To make a moving average smoother, you should get the average closing prices
over a longer time period.
How to Choose the Proper “Length” of a Moving
Average
The “length” or the number of reporting periods including the moving average
calculation affects how the moving average is displayed on a price chart.
The shorter its “length”, the fewer the data points that are included in the moving
average calculation, which means the closer the moving average stays to the current
price.
This reduces its usefulness and may offer less insight into the overall trend than the
current price itself.
The longer its length, the more data points that are included in the moving average
calculation, which means the less any single price can affect the overall average.
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If there are too many data points, price fluctuations may become “too smooth” that you
won’t be able to detect any kind of trend!
Either situation can make it difficult to recognize if price direction may change in the
near future.
For this reason, it’s important to select the length (or periods) that provides the level of
price detail appropriate for your trading timeframe.
In this section, we first need to explain to you the two major types of moving averages:
1. Simple
2. Exponential
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Simple Moving Average (SMA)
Basically, a simple moving average is calculated by adding up the last “X” period’s
closing prices and then dividing that number by X.
If you plotted a 5 period simple moving average on a 1-hour chart, you would add up the
closing prices for the last 5 hours, and then divide that number by 5.
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Exponential Moving Average (EMA)
Let’s say we plot a 5-period SMA on the daily chart of EUR/USD.
The closing prices for the last 5 days are as follows:
Day 1: 1.3172
Day 2: 1.3231
Day 3: 1.3164
Day 4: 1.3186
Day 5: 1.3293
The simple moving average would be calculated as follows:
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(1.3172 + 1.3231 + 1.3164 + 1.3186 + 1.3293) / 5 =
1.3209
Well, what if there was a news report on Day 2 that causes the euro to
drop across the board.
This causes EUR/USD to plunge and close at 1.3000. Let’s see what
effect this would have on the 5-period SMA.
Day 1: 1.3172
Day 2: 1.3000
Day 3: 1.3164
Day 4: 1.3186
Day 5: 1.3293
The simple moving average would be calculated as follows:
(1.3172 + 1.3000 + 1.3164 + 1.3186 + 1.3293) / 5 =
1.3163
The result of the simple moving average would be a lot lower and it would give you the
notion that the price was actually going down when in reality, Day 2 was just a one-time
event caused by the poor results of an economic report.
The point we’re trying to make is that sometimes the simple moving average might
be too simple.
If only there was a way that you could filter out these spikes so that you wouldn’t get the
wrong idea.
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Exponential Moving Average (EMA) vs. Simple
Moving Average (SMA)
Let’s take a look at the 4-hour chart of USD/JPY to highlight how a simple moving
average (SMA) and exponential moving average (EMA) would look side by side on
a chart.
Notice how the red line (the 30 EMA) seems to be a closer price than the blue line (the
30 SMA).
This means that it more accurately represents recent price action. You can probably
guess why this happens.
TRADING MANUAL
It’s because the exponential moving average places more emphasis on what has been
happening lately.
When trading, it is far more important to see what traders are doing NOW rather than
what they were doing last week or last month.
When to Use SMA vs. EMA
With moving averages in general, the longer the time period, the slower it is to react to
price movement.
But with all else being equal, an EMA will track price more closely than an SMA.
Because of this, the exponential moving average is typically considered more
appropriate for short-term trading.
The same attributes that make the EMA more suited for short-term trading limit its
effectiveness when it comes to longer-term trading.
Since the EMA will move with price sooner than the SMA, it often gets whipsawed,
making it less than ideal for triggering entries and exits on “slower” chart timeframes like
daily (or longer).
The SMA, with its slower lag, tends to smooth price action over time, making it a good
trend indicator, allowing it to remain long when the price is above the SMA and short
when the price is below the SMA.
So SMA or EMA? It’s really up to you to decide.
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How to Use Moving Averages to Find the
Trend
What some traders do, and what we suggest you do as well, is that they plot a couple
of moving averages on their charts instead of just ONE.
In an uptrend, the “faster” moving average should be above the “slower” moving
average, and for a downtrend, vice versa.
For example, let’s say we have two MAs: the 10-period MA and the 20-period MA. On
your chart, it would look like this:
Throughout the uptrend, the 10 SMA is above the 20 SMA.As you can see, you can
use moving averages to help show whether a pair is trending up or down.
By combining this with your knowledge of trend lines, this can help you decide whether
to go long or short a currency pair.
You can also try putting more than two moving averages on your chart.
TRADING MANUAL
How to Use Moving Average Crossovers to
Enter Trades
A moving average crossover occurs when two different moving average lines cross
over one another
All you have to do is plot on a couple of moving averages on your chart, and wait for a
crossover.
If the moving averages cross over one another, it could signal that the trend is
about to change soon, thereby giving you the chance to get a better entry. By having a
better entry, you have the chance to bag mo’ pips!
One thing to take note of with a crossover system is that while they work beautifully in a
volatile and/or trending environment, they don’t work so well when price is ranging.You
will get hit with tons of crossover signals and you could find yourself getting stopped out
multiple times before you catch a trend again.In summary, moving average
crossovers are helpful in identifying when a trend might be emerging or when a
trend might be ending.
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How to Use Moving Averages as Dynamic
Support and Resistance Levels
We like to call it dynamic because it’s not like your traditional horizontal support and
resistance lines. They are constantly changing depending on recent price action.
One thing you should keep in mind is that these are just like your normal support and
resistance lines.
This means that price won’t always bounce perfectly from the moving average.
Sometimes it will go past it a little bit before heading back in the direction of the trend.
There are also times when the price will blast past it altogether. What some forex
traders do is that they pop on two moving averages, and only buy or sell once the price
is in the middle of the space between the two moving averages.
You could call this area “the zone.”
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The idea is that just like your horizontal support and resistance areas, these moving
averages should be treated like zones or areas of interest.
The area between moving averages could be considered as a zone of support or
resistance.
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Breaking through Dynamic Support and
Resistance
But you should also know that they can break, just like any support and
resistance level!
In the chart above, we see that the 50 EMA held as a strong resistance level for a while
as GBP/USD repeatedly bounced off it.
However, as we’ve highlighted with the red box, the price finally broke through and shot
up.
Price then retraced and tested the 50 EMA again, which proved to be a strong support
level.
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5 RSI
Relative Strength Index, or RSI, is a popular indicator that helps traders evaluate the
strength of the current market.
RSI is similar to Stochastic in that it identifies overbought and oversold conditions in the
market.
It is also scaled from 0 to 100.
Typically, readings of 30 or lower indicate oversold market conditions and an increase
in the possibility of price strengthening (going up).
Some traders interpret that an oversold currency pair is an indication that the falling
trend is likely to reverse, which means it’s an opportunity to buy.
Readings of 70 or higher indicate overbought conditions and an increase in
the possibility of price weakening (going down).
Some traders interpret that an overbought currency pair is an indication that the rising
trend is likely to reverse, which means it’s an opportunity to sell.
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In addition to the overbought and oversold indicators mentioned above, traders who use
the Relative Strength Index (RSI) indicator also look for centerline crossovers.
A movement from below the centerline (50) to above indicates a rising trend.
A rising centerline crossover occurs when the RSI value crosses ABOVE the 50 line
on the scale, moving towards the 70 line. This indicates the market trend is increasing
in strength, and is seen as a bullish signal until the RSI approaches the 70 line.
A movement from above the centerline (50) to below indicates a falling trend.
A falling centerline crossover occurs when the RSI value crosses BELOW the 50 line
on the scale, moving towards the 30 line. This indicates the market trend is weakening
in strength, and is seen as a bearish signal until the RSI approaches the 30 line.
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How to Trade Using RSI
RSI can be used just like the Stochastic indicator.
We can use it to pick potential tops and bottoms depending on whether the market is
overbought or oversold.
EUR/USD had been dropping the week, falling about 400 pips over the course of two
weeks.
On June 7, it was already trading below the 1.2000 handle.
However, RSI dropped below 30, signaling that there might be no more sellers left in the
market and that the move could be over.
Price then reversed and headed back up over the next couple of weeks.
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Determining the Trend using RSI
RSI is a very popular tool because it can also be used to confirm trend formations.
If you think a trend is forming, take a quick look at the RSI and look at whether it is
above or below 50.
If you are looking at a possible UPTREND, then make sure the RSI is above 50.
If you are looking at a possible DOWNTREND, then make sure the RSI is below 50.
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At the beginning of the chart above, we can see that a possible downtrend was forming.
To avoid fakeouts, we can wait for RSI to cross below 50 to confirm our trend.
Sure enough, as RSI passes below 50, it is a good confirmation that a downtrend has
actually formed.
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G) TRADING STRATEGIES
Conditions/ Entries
1 SCALPING
1. Short Holding Periods: Scalpers hold positions for a very short duration, often
just a few seconds to a few minutes.
2. Small Profit Margins: The goal is to capture small price movements, typically a
few pips, and accumulate profits over numerous trades.
3. Frequent Trading: Scalpers execute a high volume of trades in a single day,
aiming to capitalize on numerous small opportunities.
4. Leverage: Due to the small profit margins, scalpers often use high leverage to
amplify their returns. However, this also increases the level of risk.
5. Technical Analysis: Scalping relies heavily on technical analysis, with traders
using charts, indicators, and other tools to identify short-term trends and
entry/exit points.
6. Market Liquidity: Scalpers focus on highly liquid currency pairs to ensure that
their trades can be executed quickly without significant slippage.
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DIVERGENCE
-1 hr timeframe
(RSI Indiactor)
1. Regular Divergence (or Classic Divergence): This occurs when the price makes
a new high (in an uptrend) or a new low (in a downtrend), but the corresponding
indicator fails to confirm the same movement. Regular divergence is often
considered a warning sign of a potential trend reversal.
 Bullish Regular Divergence: Occurs in a downtrend when the price
makes a lower low, but the indicator makes a higher low, signaling that the
selling pressure may be weakening.
 Bearish Regular Divergence: Occurs in an uptrend when the price makes
a higher high, but the indicator makes a lower high, suggesting that
buying momentum may be fading.
2. Hidden Divergence: This type of divergence is used to identify a continuation of
the existing trend rather than a reversal. It occurs when the price makes a new
high (in an uptrend) or a new low (in a downtrend), and the corresponding
indicator also makes a new high or low, but in the opposite direction. Hidden
divergence suggests that the momentum in the current trend is strong and likely
to persist.
 Bullish Hidden Divergence: Occurs in an uptrend when the price makes a
higher low, but the indicator makes a lower low, indicating that the
upward momentum is strong.
 Bearish Hidden Divergence: Occurs in a downtrend when the price
makes a lower high, but the indicator makes a higher high, signaling that
the downward momentum is robust.
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METHOD 1:
Conditions
>DIVERGENCE
>SIGNAL
Entries
>MARKET STRUCTURE
>PATTERNS
>INDICATORS
STEP1 - When a divergence has occurred, watch for a solid price rejection.
Or (Trendlines/Resistance/Support/Candle-Patterns/Chart-Patterns/Indicators)
STEP2 - At that point, you can put an order.
STEP3 - Stop loss can be placed at the end of the rejection wick/s.
STEP4 - Set the risk to reward ratio @ 1:2 or less.
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METHOD 2: (21/50/200 MA)
Conditions
>IF DOWNTREND TRENDING BELOW (21 MA).
>WHILE RESPECTING THE (21 MA) AND REJECTING OFF OF THE ZONE.
>THE OPPOSITE IS TRUE.
Entries
>REJECTION OFF OF THE ZONE.
>STOP LOSS ABOVE THE 50 MA
>PATTERNS
>INDICATORS
>MARKET STRUCTURE (Trendlines/Resistance/Support/Candle-Patterns/Chart-Patterns/Indicators)
NOTE 1 – When the MOVING AVARAGES are intertwining, the market is consolidating, don’t trade the
market.
NOTE 2 – The spreading of MOVING AVARAGES show momentum, and you only trade momentum.
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METHOD 3
(all Timeframes)
Conditions


>IF YOU ARE TRADING A PARTICULAR TIMEFRAME, YOU SHOULD BE LOOKING FOR A
CONFIRMATION ON THE TIMEFRAME ABOVE & THE SECOND TIMEFRAME ABOVE IT AS
WELL.
-i.e 1hr Timeframe,
confirmation: 4hr & Daily Timeframe.
-i.e 15min Timeframe,
 confirmation: 1hr & 4hr.
Entries




>HIGHER TIMEFRAME CONFIRMATION
>PATTERNS
>INDICATORS
>MARKET STRUCTURE (Trendlines/Resistance/Support/Candle-Patterns/ChartPatterns/Indicators)
STEP 1 – Go to the 2 HIGHER timeframes, and plot out levels of SUPPORT & RESISTANCE.
STEP 2 – Look for {PULLBACKS/REJECTIONS/CANDLE-PATTERNS/CHAT-PATTERNS/INDICATORS} on smaller
timeframe to enter the trade from.
STEP 3 – look for a support/resistance where there can be a reaction on the HIGHEST TIMEFRAME
STEP 4 – You can now look for the confirmational entry from the lowest timeframe of trade.
.
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METHOD 4
(1hr/5min Timeframe)
Conditions




>Only trade with the trend.
>Engulfing candle.
>RSI above the 50 level.
>Divergence (optional but added advantage)
Entries





>Enter @ the CLOSE, where the engulfing candle closes.
>1:2 risk/reward ratio.
>Check the market SUPPORT/RESISTANCE to weigh your T-P.
>Positive Moving Avarage values.
>MARKET STRUCTURE (Trendlines/Resistance/Support/Candle-Patterns/ChartPatterns/Indicators).
STEP 1 –Draw SUPPORT & RESISTANCE @ the Major HIGH & LOW points (2 above & 2 below) the current
price on the 1hr Timeframe.
STEP 2 – Drop down @ the 5min chart.
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METHOD 5
(5min Timeframe)
Conditions





>Trend Following.
>Waiting for pullbacks for Entries.
>h1 to determine trend.
>if 8-MA is below 21-MA = SELLING.
>if 8-MA is above 21-MA = BUYING.
Entries

if the market were to pull-back from the trend and touch the 8-MA, it’s a valid trigger as
long as price doesn’t close above the 21-MA.
 If the trigger is found, we are looking to enter if the market pulls down in the direction of
the predominant trend.
STEP 1 –Plot 8, 13, 21 Moving Avarages.
STEP 2 – They have to be nicely fanned out in a particular direction.
STEP 3 – For Downtrend: We are looking for a pull-back into the 8 MA, which is the lowest.
STEP 4 – (1hr/predominant trend) (5min/entry chart).
STEP 5 – Now do a 5 candle look-back from the trigger point, we are looking for the lowest point.
STEP 6 – That (-3 pips) is going to be our ENTRY level.3
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METHOD 6
(1min scalping/ YOU CAN ENTER UP TO 4 CONSECUTIVE TRADES FOLLOWING THE ENGULFING
CANDLES)
TOOLS:
-(21/50/200 smoothed MA).
-STOCH RSI settings {3/3/14/8}
-Engulfing Candle Indicator (rmunoz)
Conditions





If the market is above the 200 MA, we are looking for LONG positions.
If the 21 MA is above the 50 MA, we are looking for LONG positions.
If the market is below the 200 MA, we are looking for SHORT positions.
If the 21 MA is below the 50 MA, we are looking for SHORT positions.
When I get a touch on the 21 MA, and a CLOSE above/below, that’s when I go
SHORT/LONG
Entries

Pull-back towards the Moving Avarage zone, or hitting a Resistance/Support zone.






An Engulfing candle in that zone.
Bearish Engulfing for DOWNTREND/Bullish Engulfing for UPTREND.
Only trade it in session overlaps.
Use RSI to note direction of momentum.
Aim for 5 pips profit for short-term trades.
45 DEGREE SLOPE SHOWS BIGGER MOMENTUM.
STEP 1 –Go LONG during heavy UPTRENDS,
STEP 2 –SUPPORTS: 21MA (short TRENDS)
50MA (medium TRENDS)
200MA (long-term TRENDS)
STEP 3 – For maximum profits, aim for that one big move of the day, during your OVERLAPS. (DON’T
TRADE OVERLAPS)
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METHOD 7
(5min scalping/I will not trade the 200-MA unless it lines up with market structure
{support/resistance})
Conditions




for LONG positions, market above 50-MA, and other price action patterns that form at
the MA.
Look for a Double-bottom.
At least one of the bottoms to touch the 50 period MA.
Confirmation candle as entry point.
Entries





Confirmation candle (GREEN CANDLE TO CLOSE ABOVE 50-MA).
Place a box on the lowest body of the first bottom, and lowest wick of the first BOTTOM.
Candle must at least touch the box with wick, or body closes in box, wick of candle can
go below the box.
Candle must not close below the box.
Now look for Green candle that close above the 50-MA.
STEP 1 –Stop loss @ 1atr below SWING LOW.
STEP 2 –Candle length + ATR.
TRADING MANUAL
2 DAY TRADING
1. Intraday Timeframe: Day traders operate within the intraday timeframe,
executing trades and closing positions before the end of the trading day. This
allows them to avoid overnight exposure to market risks.
2. Leverage: Day traders often use leverage to amplify their positions, as they are
aiming to capture small price movements during the day. However, this also
increases the level of risk.
3. Technical Analysis: Day trading relies heavily on technical analysis, involving the
use of charts, indicators, and patterns to identify short-term trends and potential
entry and exit points.
4. Scalping: Some day traders engage in scalping, a subset of day trading where
they make a large number of very short-term trades, aiming for minimal profit
per trade but accumulating profits over multiple trades.
5. Fast Decision-Making: Day traders need to make quick decisions based on rapid
market movements. The ability to analyze information swiftly and execute trades
in a timely manner is crucial.
6. Risk Management: Effective risk management is essential in day trading. Traders
typically set stop-loss orders to limit potential losses and take-profit orders to
secure profits at predefined levels.
7. Market Monitoring: Day traders monitor the markets closely throughout the
trading day, keeping an eye on news, economic releases, and other factors that
can influence price movements.
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3 SWING TRADING
1. Holding Period: Swing traders hold positions for a duration longer than day
traders but shorter than trend traders. The typical holding period can range from
a couple of days to several weeks.
2. Trend Identification: Swing traders focus on identifying and capitalizing on
price swings within the context of an existing trend. They may go long (buy)
during upward swings in an uptrend or short (sell) during downward swings in a
downtrend.
3. Technical Analysis: Swing trading heavily relies on technical analysis. Traders use
chart patterns, trendlines, support and resistance levels, and technical indicators
to identify potential entry and exit points.
4. Risk Management: Effective risk management is crucial in swing trading. Traders
set stop-loss and take-profit orders to manage risk and secure profits at
predefined levels.
5. Market Analysis: Swing traders analyze both short-term and long-term market
trends to make informed decisions. Fundamental analysis may also be
considered, especially for longer-term swings.
6. Less Time-Intensive: Compared to day trading, swing trading is less timeintensive. Traders can conduct thorough analyses and execute trades without the
need for constant monitoring throughout the day.
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4 TREND TRADING
1. Identification of Trends: Trend traders use technical analysis to identify and
confirm the presence of trends in currency pairs. Common tools include
trendlines, moving averages, and trend indicators.
2. Long or Short Positions: In trend trading, traders go long (buy) in an uptrend,
expecting the price to continue rising. Conversely, in a downtrend, they go short
(sell) with the anticipation of the price continuing to fall.
3. Patience: Trend trading requires patience, as traders aim to stay in a position for
an extended period as long as the trend persists. This can be days, weeks, or even
months, depending on the trader's strategy and the strength of the trend.
4. Risk Management: Effective risk management is crucial in trend trading. Traders
often use stop-loss orders to limit potential losses and let profits run as long as
the trend remains intact.
5. Use of Trend Indicators: Traders may use technical indicators such as Moving
Averages, MACD (Moving Average Convergence Divergence), or ADX (Average
Directional Index) to confirm the strength and direction of a trend.
6. Market Conditions: Trend trading is most effective in markets with clear and
sustained trends. In ranging or choppy markets, it may be challenging to identify
and follow a trend successfully.
7. Fundamental Analysis: Some trend traders also consider fundamental factors
that could influence long-term market trends. Economic indicators, geopolitical
events, and interest rate differentials may be taken into account.
TRADING MANUAL
METHOD 1
Conditions



Trending Market.
Market broken the Low/High of the trend.
Showing price action on the pull-back in market structure (resistance/support).
Entries

Price action/indicators/patterns in market structure after pull-backs.
STEP 1 –On Lower-Highs & Higher-Lows, look for price rejection & candle patterns that initiate TREND
CHANGE.
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METHOD 2
Conditions




Wait for price to get on a key level structure like (trendline/support/resistance
{you can set a notification on TRADING-VIEW to notify when price is at a certain key
level.}
This is on a higher time-frame, one or 2 steps above.
Now go to lower timeframe to look for possible entries using the same above analysis.
Entries

Price action/indicators/patterns in market structure after pull-backs.
STEP 1 –Look for momentum shifts with rsi, ATR, to determine weakness or strength of TREND.
TRADING MANUAL
METHOD 3
Conditions


Identify TREND on a 1 step Higher TIMEFRAME.
Look for Market retracements from pull-backs as possible entries
Entries


Price action/indicators/patterns in market structure.
Look for retests on market structure.
STEP 1 –Look for momentum shifts with RSI, ATR, to determine weakness or strength of TREND.
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METHOD 4
TOOLS
{RSI/ENGULFING}
Conditions





Go to 1hr Timeframe
Mark all multiple touch SUPPORT/RESISTANCE zones.
Look for Rejections on SUPPORT/RESISTANCE.
Check for DIVERGENCE on the rejection points with RSI.
This is a possible ENTRY.
Entries


Rejections.
Divergence.
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METHOD 5 (1hr time frame)
Conditions



You are looking for a momentum move down, with big body candles.
Then a rejection on MARKET STRUCTURE.
Then a reversal, with the reversal candle covering at least the 3 candles prior to it on
reversal.
Entries



Rejections.
Engulfing
Market structure, patterns, indicators, signals.
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METHOD 6 (1hr time frame)
Conditions



You are looking for a momentum move down, with big body candles.
Then a rejection on MARKET STRUCTURE.
Then a reversal, with the reversal candle covering at least the 3 candles prior to it on
reversal.
Entries



Rejections.
Engulfing
Market structure, patterns, indicators, signals.
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METHOD 7
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G) NOTES
 NOTE: We are always trading inside a bigger trend.
 NOTE: If market breaks key market structure, you can trade in the
direction of the breakout.
 NOTE: FADE weak trends in the direction of STRONG trends
e.g (DOWNTREND- Everytime market rallies higher, take advantage and
sell short).
 NOTE: Trends run longer than most people dare to believe.
When the chart breaks a consolidation or a ranging market,
 Traders jump on board to sell
 Those who were long have to wait and close their positions @ lower
and lower prices
 Until an emotional response where:
 -the market has reached a price level significant to investors (ie
previous high/previous low) and they take advantage against the
trend, hence an increase in trading VOLUME.
 NOTE: Once a move gets in motion it tends to create ripples in the market.
For example, if a stock begins to move higher, those who have shorted the
stock will be in trouble. They may throw in the towel, which will only push
the market even higher.
 NOTE: What ever timeframe you trade in, you can use candle-charts for it.
 NOTE: Just because you don’t know why a market is rising, doesn’t mean
you should ignore what you are seeing. Never lose site of this fact if you
are a trader. There can be a million reasons why a market is trending
higher or lower, and you may not necessarily know why.
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H) SIGNALS

SIGNAL: PRICE REJECTION, #UPPER-WICK, Reversal signal. (uses:
entering/exiting positions)
 A long (upper wick) indicates that;
-BUYERS INITIALLY PUSHED THE MARKET HIGHER.
-BUT SELLERS ENTERED THE MARKET AND PUSHED THE PRICE BACK
DOWN.
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 Rejection of higher prices suggests that there may be strong selling
pressure or resistance at those levels.
 If rejection occurs at a significant support or resistance level, it could be
seen as a possible turning point in the market.
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 SIGNAL: TREND LINE.
 They help traders visually identify the overall trajectory of price
movement.
 Uptrend Line: Connects higher lows, indicating an upward trend. Draw the line
by connecting the lows of successive price swings.
 Downtrend Line: Connects lower highs, indicating a downward trend. Draw the
line by connecting the highs of successive price swings.


Support/Resistance: Trendlines can act as support or resistance levels. In an
uptrend, the trendline may act as support, while in a downtrend, it may act as
resistance.
Trend Reversal: If the price decisively breaks below an uptrend line or above a
downtrend line, it could signal a potential trend reversal.
It's important to note that trendlines are not foolproof indicators, and false breakouts
can occur
Traders often use trendlines in conjunction with other technical analysis tools, such as
moving averages, support/resistance levels, and oscillators, to enhance their decisionmaking process.
- It takes at least two tops or bottoms to draw a valid trend line but
it takes THREE to confirm a trend line.
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- The STEEPER the trend line you draw, the less reliable it is
going to be and the more likely it will break.
- Like horizontal support and resistance levels, trend lines become
stronger the more times And most importantly, DO NOT
EVER draw trend lines by forcing them to fit the market. If they
do not fit right, then that trend line isn’t a valid one!
-
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 SIGNAL: TREND CHANNELS.
-
The upper trend line marks resistance and the lower trend line marks support. So
both the tops and bottoms of channels represent potential areas
of support or resistance.
-
To create an up (ascending) channel, simply draw a parallel line at the same
angle as an uptrend line and then move that line to a position where it touches
the most recent peak. This should be done at the same time you create the trend
line.
-
To create a down (descending) channel, simply draw a parallel line at the
same angle as the downtrend line and then move that line to a position where it
touches the most recent valley. This should be done at the same time you create
the trend line.
-
When prices hit the LOWER trend line, this may be used as a buying area.
-
When prices hit the UPPER trend line, this may be used as a selling area.
Generally, the bottom of the trend channel is considered a “buy zone” while
the top of the trend channel is considered a “sell zone”.
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-
-
Like in drawing trend lines, DO NOT EVER force the price to the channels that
you draw!
A channel boundary that is sloping at one angle while the corresponding channel
boundary is sloping at a different angle is not correct and could lead to bad
trades.
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 SIGNAL: SUPPORT/RESISTANCE;
 Support and resistance are fundamental concepts in forex trading,
representing key price levels where the market tends to react.
 These levels are used by traders to make decisions about buying, selling,
or managing their trades.
 Often times you will see a support or resistance level that appears broken,
but soon after find out that the market was just testing it.
Support:
 Definition: Support is a price level at which a currency pair or any financial
instrument tends to stop falling and may even bounce back upward. It's like a
floor that prevents the price from declining further.
 Example: Let's say the EUR/USD currency pair has been in an uptrend, but it
starts to decline. As the price falls, it reaches a certain level, let's say 1.1200, and
each time it approaches this level, buying interest increases, preventing the price
from falling below it.
 Support levels indicate where there will be a surplus of buyers.
Resistance:
 Definition: Resistance is a price level at which a currency pair or any financial
instrument tends to stop rising and may experience a reversal or consolidation. It
acts as a ceiling preventing the price from moving higher.
 Example: Consider a scenario where the GBP/USD currency pair has been in a
downtrend, but it starts to move higher. As the price rises, it reaches a certain
level, let's say 1.3500, and encounters selling pressure, causing it to hesitate or
reverse.
 Resistance levels indicate where there will be a surplus of sellers.
Trade the “Bounce”
-Buy when the price falls towards support.
-Sell when the price rises towards resistance.
Trade the “Break”
-Buy when the price breaks up through resistance.
-Sell when the price breaks down through support.
TRADING MANUAL
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With candlestick charts, these “tests” of support and resistance are usually
represented by the candlestick shadows.
-
we can see that the price was merely testing that level.
-
Often times you will see a support or resistance level that appears broken, but
soon after find out that the market was just testing it.
-
To help you filter out these false breakouts, you should think of support
and resistance more as “zones” rather than concrete numbers.
TRADING MANUAL

-
One way to help you find these zones is to plot support and resistance on
a line chart rather than a candlestick chart.
-
The reason is that line charts only show you the closing price while
candlesticks add extreme highs and lows to the picture.
When the price passes through resistance, that resistance
could potentially become support.

The more often price tests a level of resistance or support
without breaking it, the stronger the area of resistance or
support is.

When a support or resistance level breaks, the strength of the
follow-through move depends on how strongly the broken
support or resistance had been holding.
TRADING MANUAL
TRADING MANUAL
 SIGNAL: Increased volume on a price level is often indicative of an
imminent change in trend ( the market reaches a price level which has
significance to investors, they take advantage of this price possibly
AGAINST THE TREND).
 SIGNAL: UPTREND to DOWNTREND – starts with LOWER LOW, then
surpass the low of the LOWER LOW. Breaking LOWER LOW gives obvious
trend continuation.
 SIGNAL: Trends end in a climax (EMOTIONAL PRICE SPIKE or VOLUME
SPIKE)
TRADING MANUAL
BAR RULES
(DOWNTREND= when chart break the first lower peak.)
1. SIGNAL (3 BAR RULE):
Consider the HIGHEST HIGH & LOWEST LOW for past 3 bars with respect
to the current one, If the market breaks one of these two levels, either the
high of the last 3 bars, or the low of the last bars, then I consider that a
trend change. (If market range is 1.5 to 2 times the value of the ATR,
market tends to snap back in the opposite direction.)
2. SIGNAL (4 BAR FRACTAL):
 The CLOSE of the current candle, must be higher that the HIGH of the
previous candle.
 The CLOSE of this candle must be higher than the HIGH of the bar 3 bars
back.
 If these conditions are met, we have a BUY SIGNAL.
3. SIGNAL(NARROW RANGE):
• One low volatility pattern is called a “Narrow Range” pattern and consists of a bar with
a range narrower than its preceding bars
• The graph shows a four-bar, Narrow Range pattern (NR4) with four bars, the fourth bar
having a narrower range than the preceding three bars
• The breakout occurs on a break above or below the high or low of the narrow range
TRADING MANUAL
 SIGNAL: I have found in my research that very often you can draw one
trendline and copy it onto other highs or lows, and you get a good idea of
support and resistance in the market, and where you potentially can buy
or sell short. E.g The Euro Dollar weekly chart on the following page gives
me a bias. On Sunday night, as preparation for the trading week ahead, I
look at the most recent 3 weekly bars.
 SIGNAL: TREND REVERSAL WARNING SIGNS:
>Volume spikes- sudden increase in trading volume.
>Price spikes- rapid temporary increase or decrease in value.
>Emotional market- participants’ reaction to price movements.
>Market has broken trendline
TRADING MANUAL
CHART TIMEFRAMES
TRADING MANUAL
TRADING MANUAL
THE ENTRY TECHNIQUE
TRADING MANUAL
TRADING MANUAL
RULES
INDICATORS:
-
3-BAR RULE
4-BAR FRACTAL
CANDLE CHARTS
PRICE REJECTION
FINONACCI
RSI
ATR
TREND-LINES
SUPPORT/RESISTANCE
HIGHER-HIGH/LOWER-LOW BREAKAGE
- DON’T TRADE A CONSOLIDATION.
- DON’T ENTER A TRADE WHEN PRICE IS PUSHING WITH THE
TREND ALREADY.
- DON’T SEE PATTERNS WHERE THERE AREN’T ANY.
- STICK WITH THE ORIGINAL PRICE TARGETS OF PATTERNS EVEN
WHEN MARKET CONDITIONS HAVE CHANGED.
- TRADE MARKET RETRACEMENTS FROM PULL-BACKS.