Daily Market Structure & Price Action Study – 5

 

See here if you missed the earlier articles –
No. 1, No. 2, No. 3, No. 4

The concept:

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.

The following are examples of entries in my Market Structure & Price Action Journal; although tidied up and expanded upon slightly to make them more "educational".

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

 

Monday 25th June 2018:

I'm a big fan of the concept of "volatility contraction leads to volatility expansion".

Usually when I show examples of this it's in the form of a triangle pattern.

But there are other ways to see it, such as identifying very narrow range bars on a much higher timeframe.

I trade the 1-minute chart. The following is the 15-minute chart, so it's quite a bit higher in timeframe. Note the narrow range bar, in this case also an inside bar which makes it even better.

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Obviously what is important here is the concept.

But let's see the outcome for this one particular example.

<image: Daily Market Structure and Price Action Study>

Lessons:

  • Volatility contraction leads to expansion.
  • While contraction is most-often seen through a triangle pattern, it can also be identified through an unusually narrow-range bar on any higher timeframe.
  • Context is important though – my personal preference is for a smooth-flowing directional market.
  • Look for entry either preempting the breakout or on the first pullback after the breakout.

 

Tuesday 26th June 2018:

One of my favourite topics of study is any blindingly obvious traps at the edges of the structure.

<image: Daily Market Structure and Price Action Study>

The reason for this structure – see Chapter 3, page 99, "Sideways Trend – Definition".

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Lessons:

  • In a sideways market environment, primary trade opportunity is sought on price interaction with the range high and low boundaries.
  • Two potential features of a quality breakout failure are (a) price having to stretch to reach the breakout level, and (b) almost immediate lack of continuation following the breakout.

 

Happy trading,

Lance Beggs

 


 

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YourTradingCoach - Admin

4 Comments to “Daily Market Structure & Price Action Study – 5”

  1. Tariq Ansari says:

    your my first coach from YouTube.
    I always love to read your articles and learn something from them. But overtime we need reminders.

  2. Raviraj says:

    Lance,

    In the case of all examples you said, that is
    1) pre empting a breakout in a smooth flowing market
    2) breakout failure of a range in a range bound market with a specific price behaviour

    how to you identify where to put your stop loss. Can you please tell where would you put your stop in both the cases discussed here.

    • Lance Beggs says:

      Let’s talk about principles rather than specific examples, because this will give you the answer to “where to place the stop” for not just this article but also EVERY trade you ever take in the future.

      The stop goes at the place where you determined that the trade premise is no longer valid.

      So in a pullback continuation trade (which is most often what I seek when pre-empting a breakout) – looking at the actual context and the current price action, where would price need to go for me to determine that “this trade idea has failed”. That is where the stop goes.

      Same in a breakout pullback. Where would price need to go for me to determine that “this trade idea has failed”. That is where the stop goes.

      Same in any trade you ever take in the future. Where would price need to go for you to determine that “this trade idea has failed.” That is where the stop goes.

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