The Basic Truth About Price Action
The institutions control the market, not just technically, but also
emotionally. They exploits the weak emotional mind of retail traders
and force them to make irrational decisions, in which they are trapped
and consequently manipulated out of the market and forced into
margin trouble. The institutions also exploit retail traders poor
understanding or price action due to their strategies.
However the institutions don’t know retail liquidity different to smart
money liquidity, all they just see is money and want to grab it. So these
institutions, otherwise known as the “market makers” move from
money to money, or in other words stop losses to stop losses, and do
this in the most efficient way.
Liquidity will always exist and therefore so will manipulation.
SNR Levels
Candlestick chart displays information on OPEN,
HIGH, LOW and CLOSE (OHLC) prices of a financial
instrument.
Line chart only displays information on
candlestick’s body in relative to the CLOSE and
OPEN prices per session. So, the line chart negates
the candlestick’s wicks.
According to the Malaysian traders, you draw line
across the candlestick’s close and not the wick.
For resistance level, you draw line from bullish
candle’s close. You’ll identify this as ‘A’ shape on
line chart. On support, it is bearish candle’s close
with ‘V’ shape.
Candlestick Chart vs. Line Chart
GAP = Hidden
Zone
SIGNIFICANT NOTE:
In most cases, Gap is usually a
‘Hidden Zone’ in a higher timeframe
(HTF) but when refined turns a
Breakout (Flipped SNR) in a lower
timeframe.
According to Malaysian traders, when
you see a Decision Level (Gap/Hidden
SNR) at the Touch of a HTF zone
especially in H4, pay close attention
because that is usually a breakout to
reverse the trend from its original
direction.
Fresh and Unfresh SNR Levels
• Fresh SNR is when a level is unbroken by
candle’s wick. If an SNR is broken by candle’s
body, it is considered a fresh level.
• Unfresh SNR is a level broken by candle’s
wick.
• A fresh SNR is more significant than unfresh
one because it holds liquidity required by the
institutions.
• Price taps into fresh SNR and it rejects with a
candle’s wick. A body touch is not accepted.
• Price travels from one HTF’s fresh level to
another breaking through the internal swing
highs and lows (LTF’s SNR) and finally to the
other side of the HTF’S fresh level.
(Monthly to Monthly, Weekly to Weekly, Daily
to Daily, H4 to H4, etc).
• The way to determine if price has reversed or not is by using
the last swing high or low that taps into HTF SnR Level.
• The last Gap Level (Open and Close) can also be used as a
Reversal signal.
Cl
Trade Setup Confirmation with an
SNR Touch A CANDLESTICK’S TOUCH OF SNR LEVEL
WITH A WICK MEANS PRICE REJECTION
OFF THAT LEVEL.
CONFIRMATION: WHEN BODY CLOSES
ABOVE OR BELOW THAT LEVEL. BUT WHEN
YOU HAVE HTF’S (WEEKLY/DAILY/H4) PRICE
REJECTION AT HTF SNR LEVEL, YOU MAY
NOT NEED TO WAIT FOR CLOSE. JUST GO
TO LOWER TIMEFRAME AND IDENTIFY A
BREAKOUT TO ENTER POSITION.
ENGULFING PATTERNS
1) ENGULFING pattern is used to mark a zone.
2) It can also be used as confirmation entry on
price retest of zone.
WHY IS ENGULFING SIGNIFICANT TO TRADE?
1) Because it carries an SNR Level at the edge.
2) It represents a price rejection when recent
candle entirely engulfs the previous candle
SNR +
MISS
• SNR have special conditions to be
considered potential in our style of trading!
This Special Condition is referred to as a
MISS. A MISS is when an SNR forms and
price moves away, but the following candle
SHADOWS FAIL to touch the SNR Level.
• The MISS VALIDATES the SNR level.
• Monthly – not consistent for direction
• Weekly – main direction
• Daily – Retracement/roadblocks for weekly
direction.
• H4 – Confirmation/Roadblocks (Gap level)
for
Daily and Weekly direction.
• H1 – very special because price decides
whether
direction is valid or not. Make sure it
gives
wick/gap candle.
According to 2 TF’s Confirmation Rule,
Weekly Setup = H4 Confirmation.
That means at LTF (H4) Breakout, you WAIT for
pullback to buy or sell from left/right shoulder or
the apex.
Price taps SNR fresh level of HTF with a rejection
(wick). Go one timeframe lower for breakout which
doesn’t need to be fresh.
You must monitor two timeframes and structures
approaching the HTF (Daily) SNR level. If you have
Daily SNR level, you monitor Daily – H4.
Also, if Weekly is bullish and Daily is bearish, then
Weekly storyline can’t continue bullish until Daily
bearish storyline is ended.
• Weekly – Current direction.
• Daily – Retracement/Roadblock for the
Weekly direction.
• H4 – Hidden base and follows direction.
• H1 – Follows direction.
• M30 – Follows direction, special
timeframe, when H1 has no setup.
• SETUP CONFIRMATION: 2 TF’S RULE!
When you get SNR level on any timeframe,
you drop down 2 times lower for
confirmation.
1) Marking the Zone
* Use a HTF Engulfing setup
* Draw an SNR Line across the CS’ C-O
extending to the right
2) Price Rejection
* Price taps into ENG zone with a wick.
* An SNR touch with a close off the level.
* Price rejection candle – Engulfing or Pin Bar.
3) Price Breakout
* HTF refinement: Go down one time frame lower.
* LTF breakout pattern with EG zone inside HTF zone.
4) Confluence Point
* Confluences: Trendline + SNR convergence
U.S News (ADP Non-Farm
Employment)
J,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
,,,
,
Engulfing + Trendline
Mapping the Trend
CONFIRMATION
ENTRY
TRENDLINE DIVERGENCE +
ENGULFING
Step Index,M15
• 99% of the time, every single day finishes with a high and a low. Your
job is to find where the high/lows of the day are likely to be made,
and how you can capitalize off of them safely.
• This the same thing I said back when I was making strong high/lows
content
CONTACT:
IYANU ADEGBORUWA
Principal Consultant, Price Action Traders
www.priceactiontraders.com.ng
t: @iadegboruwa
E-mail: [email protected]
Tel/Whatsapp: +234 803 212 2118
