Sometimes It's So Easy to Make Money

[PristineTrading 10]

While there are many concepts and nuances to be learned to be a complete technical trader and/or investor, there are a few basic criteria that if followed can make making money easy or relatively easier. Of course, this requires having the patience and discipline to wait for these high probability setups to occur. Can you do it? I will show an example of what to look for. Then it's up to you.

 

 

In the weekly chart of Google (GOOG), prices broke above price resistance with strong momentum. This was followed by the first pullback after that strength to Minor Support (mS). As a general rule, the first pullback to mS after a strong momentum break above resistance will always be buyable. This is based on the basic concept that resistance once broken will become support.

 

This area of mS is where we know buyers will be. Now we wait to see the price action of that actually happening in this time frame and the daily time frame. This concept can be used in a combination of lower time frames as well. It also applies to any tradable instrument; that being Forex, E-minis, Commodities.

 

The basics covered - Prices have made a strong move above price resistance and we wait for the first pullback to mS where buyers are. Then wait for confirming price action in that area.

 

 

oving down to the daily time frame, GOOG was not looking bullish at all before the turn. However, realize that the lower time frame never looks bullish when the higher time frame is pulling back to mS. For example, if you saw the EUR/USD currency pair in a 60-min. uptrend that was pulling back to mS, the 5-min. time frame would be in a downtrend. The expectation is that the lower time frame is going to turn in the area of mS in the higher time frame. Now wait for confirming the price action in the lower time frame before taking a position.

 

As GOOG moved into the mS area shown on the weekly time frame, the confirming price action began (in this time frame) with a gap higher and then a strong close into resistance. Here is where it gets interesting and it will become obvious if the big money buyers are continuing to step up. We want to see that big green bar's low and ideally its mid-point defended by the buyers.

 

While the buy signal candle came five days later, it could have come after only two days. There is no set number and this is where our Bar by Bar analysis concept comes in to tell us when GOOG will move. Bar by Bar analysis combines each new bar's meaning within the context of our bigger picture analysis. One bar can be meaningless in of itself, but when combined with our bias and the other bars, it's a powerful concept.

 

The basics covered - While our lower time frame is moving down, the higher time frame area of mS is where prices should produce the price action that confirms that area and reversal of some type happens. Reversals can happening in many ways, so do not be set on it having to happen in "your way." Once the action occurs find an entry signal using Bar by Bar analysis.

 

 

I have shown you the basics of what to look for in those easy money situations using two time frames; I used the weekly and daily. We can also take that bias into the intra-day time frames as I explained above with EUR/USD, but it could be anything. Now, let's look at some detail that occurred on the 60-Min. of GOOG that showed the "early turn" and a couple of Pristine concepts to understand the price action of the turn.

 

As GOOG was trending lower into the area of mS on the weekly time frame a 60-Min. bearish Wide Range Bar (-WRB) formed accompanied with a huge volume spike. That's a bearish event, but remember this was right into the weekly mS! That was followed by a stall and bullish Wide Range Bar (+WRB), that's a very bullish group of events that started the early turn.

 

Pristine Tip: That 3-bar reversal was the Bottoming Tail (BT) on the daily time frame. The Advanced Candlestick reader understands how different arrangements of candles can mean the same thing in the same time frame and/or different time frames. Names of candlesticks are meaningless and are more likely to confuse traders that use them or worse by causing avoidable losses and/or missed opportunities.

 

Once GOOG gapped up and ran higher a Pristine Price Void (PPV) was created. In other words, there was now no price support below for traders to bid at. Support would need to be "created" for traders to bid at. Creating support and resistance is a powerful concept used by Pristine Traded Traders (PTT) to see where the big money is entering prior to existing support or resistance. Pristine Tip: Strong upward price moves often do not pullback to support, they create it.

 

With the bias from the time frames shown above, intra-day traders could move to lower time frames of their choice to find confirming buy setups to enter. At this point, this is still the case.

 

Side note, while I have used a 20-MA on all time frames. It has no relevance to being actual support, resistance or the trend. It is simply a "visual aid" to speed the analysis once understood.

 

PRISTINE - A Trading Style, Often Imitated, But NEVER Matched!!!

 

Greg Capra

President & CEO

Pristine Capital Holdings, Inc.

[pocrel 10]

A golden rule on the pull back is that it should never be on heavier volume than the pullback

[baytrader 10]

  PristineTrading said:

Strong upward price moves often do not pullback to support, they create it.

 

Good point. Strong uptrends are more likely to stall at resistance briefly and continue upward. This can often be seen as a stock rides a moving average such as a 20 sma.

[DbPhoenix 42]

  pocrel said:

A golden rule on the pull back is that it should never be on heavier volume than the pullback

 

I assume you mean "heavier volume than the continuation", and it's not quite a golden rule. Volume may be heavy on the pullback as buyers rush in to support the price. It may then be lighter as sellers allow price to rise without much resistance.

 

Db

[DbPhoenix 42]

  baytrader said:

Good point. Strong uptrends are more likely to stall at resistance briefly and continue upward. This can often be seen as a stock rides a moving average such as a 20 sma.

 

A stock won't "ride" a moving average. The moving average tracks the progress of the stock.

 

Db

[MightyMouse 12]

  DbPhoenix said:

A stock won't "ride" a moving average. The moving average tracks the progress of the stock.

 

Db

 

A stock "riding" a moving average will "rob" an account

[MightyMouse 12]

  DbPhoenix said:

A stock won't "ride" a moving average. The moving average tracks the progress of the stock.

 

Db

 

A stock "riding" a moving average will "rob" an account of all carfare

[baytrader 10]

  DbPhoenix said:

The moving average tracks the progress of the stock.

Db

This is true. I should have wrote: APPEARS to be riding a moving average.

I understand price action and meant it from an observation point of view. Mostly It's all about levels imo.

[SIUYA 11]

I think this article is full of half generalised information that does not add much.

You may as well just have said, have some patience and look for a second break on the close of a support level to the upside before entering a long trade.

 

There are multiple buying opportunities and equally so shorting opportunities with low risk in case it did turn around (market tops can look remarkably similar).

there is no additional levels of where stops might be, where to take profits.

 

  PristineTrading said:

In the weekly chart of Google (GOOG), prices broke above price resistance with strong momentum. This was followed by the first pullback after that strength to Minor Support (mS). As a general rule, the first pullback to mS after a strong momentum break above resistance will always be buyable. This is based on the basic concept that resistance once broken will become support.

 

so if resistance once broken becomes support, then support once broken becomes resistance......

there is no explanation for minor support which is clearly below resistance when the support is broken.....

in other words, it would imply you should be bearish unless you show how you are calculating minor support.

 

Basically the value is in understanding that these are zones......and that you should wait and look for confirmation.....but if you did not wait on the previous break you could have bought at 6.70 and watched it rally to 7.70.

Now by waiting until you get to buy at 6.70....what now?

 

  PristineTrading said:

. Now we wait to see the price action of that actually happening in this time frame and the daily time frame. ...............

The basics covered - Prices have made a strong move above price resistance and we wait for the first pullback to mS where buyers are. Then wait for confirming price action in that area.

 

 

As GOOG was trending lower into the area of mS on the weekly time frame a 60-Min. bearish Wide Range Bar (-WRB) formed accompanied with a huge volume spike. That's a bearish event, but remember this was right into the weekly mS! That was followed by a stall and bullish Wide Range Bar (+WRB), that's a very bullish group of events that started the early turn.

 

So this could be a buy signal in the support zone.

Plus if you are only buying off a close of the daily above the resistance line, then why look at the 60min bars unless you are looking for better low risk entries there.

 

  PristineTrading said:

Pristine Tip: That 3-bar reversal was the Bottoming Tail (BT) on the daily time frame.

 

 

hindsight unless you have specific ways of dealing with wide range bars and reversals when they occur in a zone of support.

 

  PristineTrading said:

Pristine Tip: Strong upward price moves often do not pullback to support, they create it.

 

a good tip......

 

 

...............

IMHO - too generalised and generic to be worth much except to reinforce patience sometimes works, and while Pristine might offer some sound advice sometimes (I dont know) this is not some of their best.

[Patuca 13]

  DbPhoenix said:

I assume you mean "heavier volume than the continuation", and it's not quite a golden rule. Volume may be heavy on the pullback as buyers rush in to support the price. It may then be lighter as sellers allow price to rise without much resistance.

 

Db

would you mind posting a intraday chart showing what you just described?