Price Action Trading Strategy

Traders, welcome back to our price action trading lesson. We're looking at S&P 500 and many futures. The time frame is 2000 tick chart. We're gonna be using price action to help us follow the market. So right now, the big structure for the most part represents A trading range because we have spike down, spike up, spike down, no big trending structure in either direction. Two-legged pullback to the upside, breaking new high, and we have price action trading lower, two legs down. And because market keeps trending lower quite significantly, the second leg is a little bit longer than the first one. I like drawing a little bit wider channel and see if this channel is going to hold or not. Okay, the EMA is going to be important. You have one swing, second swing, and the third swing is the confirmation that you can trust the channel. You have a second entry short but promise it's a weak bar, bullish bar, so I can't really take that. I was looking for some lower high confirmation setup to confirm our scenario that the channel is valid. There was no lower high and we have another significant push face down. Further confirming that this channel is valid, okay? So now it really looks like a trading range so it makes sense to expect prices go to the bottom, low today right here. We have a lot of confirmations of the downtrend. And right now we have micro double bottom resetting the count. You can see we have micro double bottoms, we have new low, first entry short, count reset, so first entry short again. And we have second entry short. Now this is how I drew my first trend line when I was watching this live because we went a little bit sideways. I actually took the second entry short myself. I had a little bit different bars but this is a decent second entry short. So this is a good second entry short to consider because we have two key entry points. I took this trade as well. Looking back, we can draw a trend line a little bit better like this starting from the very beginning of the correction. This would make the trend line a little bit wider but I think because we have downtrend confirmed, two key entry points is a decent trade to consider and it ended up being a losing trade so I had my losing trade right here on the second entry short but no problem. This is a good trade to consider. Simply too many factors that are in favor of this trade. Then I was thinking, okay, we may not get new low and market suddenly reversed down and we have break, push to new extreme. So downtrend, break, push to new low. If you have some low or high, let's say somewhere here after this decisive spike down, you can consider because we need new low tested. There was no low or high downtrend played out so I'm gonna pause the game to go short especially since we're bouncing off the low today. It's a high likelihood we're gonna reverse now. I'm gonna draw the uptrend. I was looking for a failed second entry short. Lowest low, I'm gonna reset the count. First entry short, pullback, second entry short. Failure would be a reversal pattern. Can I get a reversal pattern? Not really, we broke the low EMA. Here I was expecting second entry long, new high, first entry long, pullback, second entry long because the uptrend still needs new high. No second entry long and we have a break, push to new high, uptrend played out so I'm gonna draw one leg like this, break, second leg, break a new high, measure move. So I'm simply following the trendline rule using the visual aspect of two-legged pullback. Okay, we are breaking below but no real setup to sell. I was looking for some failed second entry long reversal pattern below EMA. Once again, when the structure is consolidation, trends tend to be quite whipsaw-y and they tend to pivot quickly. They tend to be short-lasting so you can always expect failed second entry short after downtrend gets new low or failed second entry long below EMA after uptrend gets new high. I drew my channel a bit wider like this simply expecting reversal, you have overshoot and market continued to trend higher. Okay, so we have brand new uptrend working higher. Of course, I cannot sell because you have to ask yourself why we're not continuing to go lower? Why are we back above EMA? So now, a little bit tricky because we need to make sure you understand the structure. Is there some bigger pattern? Initially, I'm gonna start with a smaller channel like this. I'm gonna start with a smaller channel like this where we have uptrend working higher. I was actually considering second entry long because there's a big chance this uptrend is gonna get new high tested. You have a second entry long but you're far from EMA, not even a tail is touching it, body is weak so I cannot take a second entry long like this. You have almost double top. Market is breaking below EMA. Here, I was expecting one more push to new high and market reverse completely down like this. So now, what I'm gonna do, I'm gonna mark this as a break in new high. So far, I can see price action is very whipsaw-y. You can see just bunch of shortened channels pivoting quickly. No real strong trend in this consolidation established. Quite unusual but I simply have to roll with the structure I have. I have to trade the structure I have, I get, not the structure I want. It's simply our job as traders that we need to do. It's a little bit easier said than done. Remember, you don't want to force anything. You have downtrend, break new low. I'm gonna redraw brand new uptrend, something like this. Once again, one leg down, break, second leg down, break, push to new low. I was also playing initially the spike and a channel pattern, something like this. But once I saw price is breaking above the EMA and retracing the entirety of the spike and the channel pattern, I deleted it because this is such a significant bullish trend up that I actually like thinking about going long and we have second entry long right here. New high, first entry long, pullback, second entry long, downtrend played out, great single bar. So this is a decent second entry long to consider. I actually do this setup as well and what worried me about this trade, the same thing that worried me here is that number one, the NQ was bullish year and bearish year, which NQ and ES typically, they go together and also higher time frame, 10,000 tick chart looked like the downtrend here needs to get new low. When you're gonna draw downtrend a little bit too broad at the moment, we can't really find a great downtrend. So I wasn't really focusing on this. I was expecting new high, at least for scalp of this channel and I ended up having a second losing trade for the day again. It was quite a while since that happened to have two losing trades like this in a row especially, but it can happen sometimes. So I get tricked here. I like this trade and I get tricked here again. Locally, this trade looks really good. I really thought we're gonna test the new high at least and then anything can happen, then we go lower, but simply this is part of trading, nothing I can do. I wasn't even upset about this because simply these trades, they look too good for me to skip or at least not take a risk. And when the trade looks good, I simply cannot be mad or frustrated. Sometimes we're just gonna have losing trade. I do eventually sometimes get frustrated as well if I, for example, force impulsive trade that I know I'm not supposed to take it, but I jumped the gun anyway. That can happen here and there and you can actually feel frustrated a little bit. That is normal, you're human, but when you take a losing trade like this and you like it overall, there's a high chance it's gonna work. You simply cannot get mad. You have to accept this. This is part of trading. And now because we keep trading lower, I'm gonna draw some wider channel, something like this because why prices simply continue to go lower. Another strong push phase down after these two legs down. Okay, we have new low, first entry short, pullback, second entry short, but the second entry short is above EMA with the terrible bar. Can I get some lower high? Had there been a break below this bar? It's a decent lower high, but no break below, so no lower high yet. You cannot sell below bull bar like this. I'm just waiting. Can I get a felt second entry long? New high, first entry long, pullback. Second entry long failure and I have a felt second entry long. Uptrend, break, new high, so uptrend played out. The EMA keeps holding. It looks like brand new push phase is about to start. So this is a decent high property setup to consider. Felt second entry long. This is actually a very nice trade. You can see what a significant runner this would have been if you're holding a runner. You have overshoots. I'm gonna skip the very first second entry short. Okay, I still can't take it because I have uptrend working higher like this. That's a bad bar after we should can't take it. And market simply continues to go lower, not really acting as overshoot. So I'm just gonna make the channel a bit wider. It looks more like it's a two-tier channel now since it's not acting as overshoot. After overshoot, you'd expect some stronger pullback in the opposite direction here. You continue to go lower without a stronger pullback. So it doesn't seem like overshoot. Gonna redraw the short term uptrend working higher. Okay, I have new low here. First entry short, pullback. Second entry short, but I can't sell below bullish doji inside bar while the uptrend is in play. So no entry here. Can I get something better? Some double trap, no lower high here. Okay, we have a double trap and it visually looks like one leg up, break, second leg up. New low, first entry short, second entry short, bad bar. And this is double trap because it traps all the early sellers and all the early buyers. It's basically third entry short with the trend but it needs to close below the EMA. This is a great double trap. I brought this setup. Nice single bar, so decent. I brought this setup as well. Great double trap. Okay, you have to ride it out but you have to keep your stop loss one tick above the single bar and your stop loss would have survived. The scalp was made and now it's getting a little bit too late. There's even decent lower high but it's simply way too late. Market is about to close. And now the market is closing. So this is the overall structure for today. Not an easy day, especially because we had two tricky setups right here. One second entry short and one second entry long. They tricked me as well. You have one setup, actually two setups to make it back. So you can pretty much be break-even. Also depends if you're holding a runner or not. So if you took these two trades, you don't really have to be upset because I think they look decent as well. Overall structure, quite all over the place. Trends are fairly weak and they pivot quite often. So not the best structure to consider. Hopefully tomorrow is going to be much better. So I hope you had a good training. I'm gonna wrap it up. I'm gonna talk to you next time. Good luck with your trading.