I recently posted the following image on the YourTradingCoach Facebook page.
For the sake of this article, ignore the text in the yellow box.
Actually… don't ignore it… put it aside for now but do think about it later. It's incredibly important and may well reveal to you the real essence of trading psychology.
But for the sake of this article, let's focus on the trade.
The facebook post generated the following comment from a reader:
There is no reason to buy till I can recognize a changeover of power!
This is an absolutely valid comment given the lack of context provided in the facebook image, as touched upon in my reply:
This chart is missing all the wider context that comes from HTF and earlier TTF price action. Any discussion of long vs short vs stand aside is not really possible just from this small snapshot of data. The point of the post though was not the trade, but the text regarding fear and trading psychology. (There was good reason to go long though!)
So let's look at the trade in a little more detail.
It's important, because it reveals a different way of thinking that doesn't necessarily require you to wait for a clear and definitive "changeover of power".
First let's look at the higher timeframe S/R framework: