How To Trade Blog: Flash’s Amazing Price Action School: Trend + Key Level + Signal (Part 4)

There is a funny story about Bitcoin but it’s 100% real.

It is about a guy who bought Bitcoin (BTC) in early 2018.

(A) Well, the brokers “drive” BTC badly. They pushed the price from $20,000 to nearly $10,000. Less than 1/2 already, let’s buy it.

(B) The bull run was terrible but the correction ended. Continue to buy BTC (Average price).

(D) I’m a long-term investor. I’ll buy and hold. BTC will surely go up again.

………….

1 year later, holy moly, SELL SELL SELL. Finally, the price has risen enough to sell for breakeven.

LOL because I find myself in this story too. At first, I also thought about lots of conspiracy theories, then consoled myself and became a long-term investor finally. When BTC rose, I sold as fast as I can to run away from this market.

Why do I tell such a long story? To shape you with a mindset. Let’s focus on analysis and act based on it. This is the essence of Price Action. Do not dance around and predict baselessly about brokers’ behavior or the secret of the crowd, etc.

About Flash’s Price Action school

– Analyze the daily chart. Enter orders on the H4 timeframe.

– Question 1: What is the market trend? Look at the daily for the answer.

– Question 2: Where is the key level (Supply and Demand zone)?

Flash's Price Action school — Flash’s Price Action school

– Question 3: When the price returns to the Key Level, wait for the signal (H4 chart). If there is a signal, then enter. If not, do nothing.

– When the signal has met enough requirements, enter an order, set Stop Loss (SL) and Take Profit (TP).

– Then what? Just ignore it. At the end of the month, summarize the results first and find a way to do it later.

Learn to analyze and come up with scenarios

Remember: Analyze and give market scenarios. Based on how the price goes, we take that scenario out and act. We don’t just analyze and predict that the market will rise or fall.

It’s very dangerous because when you predict the price to increase, your head only thinks of a buy order. Therefore, it is very easy for you to fall into a state of “crazy buy”. Regardless of the dropping price, you still try to buy and die.

Real trading in Gold (XAU/USD) – September 7, 2021

I will take a real example for you to easily understand.

Daily chart: Downtrend? That’s right. There were lower highs and lower lows on the chart. The current bullish wave (A) was simply a retracement wave.

If and only if the price broke through the critical Key Level (yellow zone), we could conclude that the market would reverse. Currently, gold was still in a downtrend. So, what did we have? Downtrend + Key level => Wait for a bearish signal => Our setup has met all requirements => Enter a SELL order.

Gold price at the Key Level in the downtrend

Signal – H4 chart: After the breaking candlestick signal, the price would plummet. Remember to act only after the candlestick closes.

SELL gold order: 1815
SL: $14 (140 pips).
TP: $35 (350 pips) at the nearest Key Level.

Identify the main Trend

Uptrend or Downtrend? Use your eyes with simple thoughts. Don’t do conspiracy theories, predictive news. It is crap. Please do not confirm trend reversal points and don’t attempt to use the top or bottom fishing strategy either. Let the fools do it. Your job is to identify the trend and follow it.

As I said from the beginning, Key Level = Supply/Demand zone. For many others, Key Level could be support and resistance, or the nearest high/low. It’s depending on you.

Uptrend + Demand zone

Downtrend + Supply zone

Entry signal? I’ll leave it for later (Part 5). We will spend a whole long article talking about 2 patterns, Marubozu and Pin Bar. There are some common price patterns too.

Some articles you should re-read.

What Is An Uptrend? How To Trade Forex Effectively In An Uptrend.

What Is A Downtrend In Forex? How To Trade Forex With A Downtrend.

How To Identify And Trade With Supply And Demand Zones (Chapter 2).