Daily Market Structure & Price Action Study – 3

 

Week 3 of 4 while I'm away from home…

From the original post:

I've been writing online for over a decade now. And for that whole time I've been promoting the idea of daily study in both Market Structure and Price Action.

It's a simple task that takes no more than five minutes, but which offers incredible value to your own learning and development.

Sometimes this study fits within certain themes, if there is a particular feature of market structure which I want to focus on for a period of time.

Often though, it's completely unstructured. Simply searching for whatever captures my attention.

Either way, every trading day after the session is over, I look to the charts to find something interesting. Having done this for so long the findings are usually just reinforcing prior lessons. But occasionally, they'll uncover something new which can lead to further exploration, further learning and further growth and development.

As I'm away from home for the month of April, celebrating my 50th birthday, and unable to prepare any new articles for the YTC newsletter, I though I'd simply preload the email system and blog with a few articles which share some daily market structure and price action study.

I hope you find it useful. If you do, consider starting your own Market Structure & Price Action Journal.

Friday 16th March 2018:

One of my LEAST favourite types of market opening price action:

<image: Daily Market Structure and Price Action Study>

Notes:

  • A = Price drives higher from the open. It pauses (smaller range candle at the top). I'm watching the lower timeframe for potential opportunity to enter LONG for continuation higher.
  • B = Nope… the market drops lower.
  • C = Price drives lower. Again, I'm watching the lower timeframe for early signs of potential opportunity to enter SHORT for continuation lower.
  • D = Nope… the market pushes higher.
  • At this point, we have the start of a broadening formation. Certainly one of my least favourite environments from a market open.
  • At this point, I need to step back from the chart a little to avoid any impulsive action. It could well continue for another few legs. I am NOT ALLOWED to act unless I see some form of partial decline or partial rise.

 

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Notes:

  • E = Price pushes higher. I'm not interested.
  • F = Price pulls back and stalls. One candle. Two candles. It's finding support. This is a potential partial decline. Now I'm interested.
  • G = Take the PB trade opportunity for continuation. Manage aggressively. It needs to break to new extremes, or you have to get OUT OF THERE.

 

Lessons:

  • A broadening formation is a sequence I have struggled with in the past.
  • I recognise a potential broadening formation through rejection one way and then again the other way.
  • The best way I have found to manage this situation is to stand aside until recognising either a partial decline or partial rise.

 

Monday 19th March 2018:

One of my favourite technical analysis concepts – volatility contraction leads to volatility expansion.

On ALL timeframes.

Let's look at a higher timeframe (60 minute chart) example.

<image: Daily Market Structure and Price Action Study>

Notes:

  • H = Multiple-day volatility contraction
  • I = Gap open (above the prior days high and clearly beyond the boundary of the volatility contraction pattern
  • And again…
  • J = Multiple-day volatility contraction
  • K = Gap open (below the prior days low and clearly beyond the boundary of the volatility contraction pattern
  • In both cases the gap open led to a strong trend for several hours.

 

Lessons:

  • Higher timeframe volatility contraction can lead to highly directional trading sessions, when the open gaps beyond the pattern boundary.
  • Watch the TTF opening range for confirmation of potential continuation.
  • On a confirmed break of the opening range, anticipate a trend day UNTIL PROVEN OTHERWISE.

 

Happy trading,

Lance Beggs

 


 

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YourTradingCoach - Admin

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